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New Year’s Debt Resolutions

Created: On December 30, 2008 @ 2:42 pm In

Towards the end of every year you will find the media publishing stories about financial new year’s resolutions. [1] Newsday.com and [2] DetNews.com are just two examples of outlets that have recently ran articles encouraging consumers to implement some financial changes in 2009. You should never wait to implement positive changes in how you manage your family’s finances, however, it seems fitting to touch on an area that many can benefit from in 2009.

In the past year we have seen home values decline, lending guidelines tighten, and creditors freezing or lowering credit limits. If you’ve relied on borrowing against your home equity or utilizing available credit to make ends meet, you’ve most likely been forced to make some changes.

One of the most important areas that you should focus on in 2009 is managing and eliminating your debt.

Managing and Eliminating Debt

Your primary focus should be on reducing your dependence on credit and eliminating as much of your existing consumer debt as possible. The credit markets may rebound and we may see guidelines loosen a bit in the future, however, there are never any guarantees that credit will be available to you. Credit cards can be a useful tool in times of emergencies and helping to maintain or improve credit scores, however, they should never be your primary method of paying for things.

If you are currently adding to your current debt balances or only paying the monthly minimum payments, you first need to look at your spending habits and what you own. You have to make some hard decisions and cut your spending where possible and sell any unnecessary items to raise cash to pay down your debt.

After reducing your spending, you have several options to reduce or eliminate your current debt:

  1. Pay it. Apply any money you have left over every month, after building up an emergency fund, to paying down your debt. You can either apply the extra money to the smallest debt you have to pay it off quickly or you can target the debt with the highest interest rate. More important than anything is that you do something.
  2. Consumer Credit Counseling. If you have been on time with your payments and can afford your current monthly minimums, consumer credit counseling may be able to help you to reduce the interest rates on your debt and put together a repayment plan with your creditors. For some people, this added structure can be beneficial.
  3. Debt Settlement. If you have fallen behind or do not believe you can continue to make the monthly minimum payments, debt settlement may be a good option for you. Whether on your own or with the help of a legitimate debt settlement company, you can negotiate your debts with your creditors in an effort to pay them off quickly for less than you owe.
  4. Bankruptcy. If you’ve fallen behind on your payments, are being sued, having your wages garnished, or losing your home to foreclosure, bankruptcy may be the best option.

All of these options can be effective for the right person in the right situation. It’s important that you research each option to understand the risks associated with each. Regardless of which path you take, 2009 should be about reducing your debt and dependence on credit.

About the Author:
Chris Rocks is the Regional Director of the [3] National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges. He can be contacted by visiting his personal site, [4] GoodCreditLiving.com.

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2008/12/30/new-years-debt-resolutions/

URLs in this post:
[1] Newsday.com: http://www.newsday.com/sports/olympics/sns-yourmoney-1228resolutions,0,7262356.story
[2] DetNews.com: http://detnews.com/apps/pbcs.dll/article?AID=/20081229/BIZ01/812290331
[3] National Credit Federation: http://www.nationalcreditlawyers.com/
[4] GoodCreditLiving.com: http://www.goodcreditliving.com/