Ask The Money Coach

Posts Tagged ‘Debt Management Program’

Famed billionaire investor Warren Buffett once said that if you find yourself in a hole, the first thing you must do is to “stop digging.” It may sound basic, but every day, people with massive amounts of consumer debt continue to dig themselves deeper into the red by spending as if there’s no tomorrow. If you know you’ve been over-spending, you must vow to end negative spending habits. This is crucial to fixing your finances. Let me put it another way: if you’re serious about chucking your credit card debt, you have to put an end to frivolous or excessive spending – starting today!

So many of us tend to make empty promises to ourselves and others: promises that we’ll spend less and save more; promises that next year we’ll get our act together; promises that with the next promotion or the next bonus or the next money that comes in we’ll make good use of that cash – anything related to whipping our finances into shape. It especially happens at the beginning of the year. Have you ever made a New Year’s resolution concerning your finances? More to the point, if you have such a resolution going forward, chances are you’ll need all the help you can get to stay on track. The December holiday season is the time of year that many of us tend to overspend – leaving us with big credit card bills, and the equivalent of a shopper’s hangover that lasts well into the following year.

For those of you determined to better manage your money, you don’t have to live a life of deprivation in order to get into the black. The best way to turn your financial resolutions into lasting changes is to take some concrete steps that won’t cramp your style, but will definitely improve your personal finances.

Here are some ways you can do just that:  Read the rest of this post on The Zero Debt Online Course. It’s free!

Q: Will Entering a Debt Management Program Hurt My Credit Score

A: If you’re having trouble paying your bills on your own, yes, a debt management company can help. And contrary to popular opinion, simply enrolling in a debt management plan does not impact your credit score. Read this article on the differences between debt management and debt settlement companies, and learn why I strongly recommend debt management firms.  (Read More).

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Question: We live in a home appraised years ago at $80,000 and owe $44,000. We have a home rented out which appraised at $65,000 years ago too and we owe $22,000. We have never taken a home equity loan on either house. I have been drawing unemployment and paying bills with this money for 16 months but my credit card bills are driving me crazy. I have 3 cards which total $10,000 and all are maxed out. Is there anything I can do to pay off these credit cards?

Answer: Sorry to hear about your job loss and your extended period of unemployment. It’s hard to rid yourself of credit card bills when you simply don’t have any earned income coming in because your unemployment benefits, naturally, have to just pay all your current bills. You said “we” several times in your message. So I assume that you have a spouse or a significant other. Hopefully, that person is earning W-2 wages or self-employment income. Your rental home may turn out to be your saving grace. You said that the appraisals on both homes were done “years ago.” Was that two years, five years ago or something else? Whatever the case, that’s an eternity in the real estate market. So do yourself a favor and get an up-to-date market analysis of your house. You don’t have to pay for a full appraisal at this point. Just get an experienced realtor or real estate agent to check out your rental (and your home too) to tell you what the current market value is for those properties. If you do have to sell one of them shortly, at least you’ll know how much money you can expect to net. Those funds may be sufficient to pay off the credit card debt. Meantime, read this post about tips for getting out of debt and managing your finances when you’re out of work or have reduced income. And this one too for advice about debt management plans and a referral to the National Foundation for Debt Management (http://www.nfdm.org). Good luck!

Related articles

• One more time: The best paths to help you wipe out credit card debt (askamoneyexpert.com)
• How U.S. Consumers Are Conquering Debt (money.usnews.com)

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Q: I Have Three Credit Cards and My Combined Monthly Payments are About $700. Is it Wise to Consolidate Through a Debt Management Agency? Will This Affect My Credit Score?

A: If you’re having trouble paying your bills on your own, yes, a debt management company can help. And contrary to popular opinion, simply enrolling in a debt management plan does not impact your credit score. Read this article on the differences between debt management and debt settlement companies, and learn why I strongly recommend debt management firms.

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• Fact Versus Fiction About Credit Scores (askamoneyexpert.com)

Q:I Am a Single Mother of 3 Kids and Have a Debt Total of More than $30,000. I Don’t Have Any Savings or Investments, and Nothing Saved for Retirement or College Education. I am Facing Garnishment of My Wages Due to One of the Debt I Currently Have. Would Bankruptcy Be the Best Option for Me at This Time to Give Me a Fresh Start?

A: You certainly sound like a candidate for bankruptcy. I assume that $30,000 in debt is credit card debt, and not student loan debt. If it’s college debt, you can’t wipe that out in bankruptcy court, so there’s no point in filing bankruptcy to deal with student loans. Since you have no savings or investments and you’ve been unable to pay your debts, I know that your bills must be exceesive relative to your income. Having three kids to raise by yourself can take a financial toll too. Given all of your circumstances, it’s not unreasonable to explore the option of filing Chapter 7, which would wipe out those debts and keep your wages intact, free from garnishment.

Since a bankruptcy filing will remain on your credit report for 10 years, I would advise you to first make sure that you’ve tried everything else within reason before you seek bankruptcy. For example, have you tried to negotiate with your creditors? Have you considered credit counseling or attempted to enroll in a debt management plan? Also, when you look at the $30,000 in bills that you owe, is it realistic that you can pay those debts off on your own in about five years or so? If you’ve tried everything else and it hasn’t worked, and if you don’t think it’s feasible to pay off your debts in five years, then bankruptcy likely makes sense. Just get some expert help if you do file for bankruptcy protection. Go to a free legal aid clinic in your area or consult a qualified bankruptcy lawyer in your state for the specific bankruptcy laws where you live.

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