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Managing Debt Recovery - Part 1 - When you decide to Get Out of Debt

Part 1 of a three, (3), part series explaining how to put together and manage a debt recovery plan. If you are struggling with how to get started with your debt recovery then start here.

Perhaps you are one of those borrowers that likes to charge it to your plastic.  If so, you have probably piled up a mountain of debt. Card debt.  Too bad we can't just wish it away, right?  Many of us compound monetary issues by ignoring the problem, (kind of like wishing it away and then not following up with actions to actually make it dissapear).

This is sadly a bad set of circumstances when you consider that folks who are deep in debt need to face reality the most.  It's time to consider whatever it is that they've still going for them and be prepared to face their debt no matter how overpowering an issue it seems to be.  It is not fun in the least but the earlier you start taking care of it, the earlier the oppressive weight of debt can be lifted from you life.

Surrendering credit cards is not easy for the common shopaholic.  If that describes you, you'll need to continually remind yourself that if you do not handle the problem fast, your debt will balloon out of control and before you know it you will be filing for bankruptcy.  Just like the credit card itself, you can pay now or pay later.  You can choose to exercise a little discipline now and flex your bank account later.

Lots of folks who have had a similar problem have handed themselves a second financial life by stopping irresponsible spending habits and paying off all their debt.  Stopping the spending is usually the easiest part since often times the choice is made for you by the credit card company.  The more difficult part is that they also put in the effort to budget and prioritize their payments.  They went and did something totally foreign to them - they began to essentially spend less money than they earned.  So you see, all is definitely not lost but it'll take some effort.

When you choose to make a change and get out of debt you will have to talk with your creditors.  Be friendly with your creditors and by friendly we mean asking for their recommendation on how it is possible for you to restructure your debt into a plan that you can truly afford.  You do not have to starve yourself for years.  Though, if you are so inclined, can also help you with weight loss - but still not recommended, (smile).  Do not be affraid to ask for a sizeable reduction in the interest you are being charged.  You will also want to ask for a little forgiveness in the total amount you owe; a fifty percent reduction is good target for debt settlement.

Knowing that you are taking responsibility for your credit card debt relief should give you confidence that you have grown in financial maturity.  Your creditors will most likely be more than pleased to help you.  Consider the fact that fifty percent of whatever you owe at a lower interest rate is better than one-hundred percent of nothing if you file for bankruptcy.  Not that bankruptcy will eliminate all your debt, it will not; but it would be a hassle for the creditors to recover and most just charge-off the debt.

If your income does not allow you to enjoy some of life's luxuries then it is better to make a choice to bite the bullet, so-to-speak, or get a higher paying or second job.  You should ensure that your earnings, irrespective of how much you make, is more than you spend.  Let us say that again.  Do not ever spend more money than you make.  Of course there are exceptions to the rule, (like a home loan or car loan), but do not forget the rule.  A special night out to reward your son for getting his driver's license is not an exception.  However, letting your son pick the main meal menu would can be just as special.

In upcoming articles, we will discuss an additional concept of the Debt Snowball Method and Managing Your Credit.  Just look for parts two and three of this series.

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