Hi! and welcome to the “Help! I’m Drowning In Debt!” blog. This blog is about the problems relating to the overwhelming debt of Americans and what we can do to not only survive but overcome this terrible plague. I’ve written a short but helpful book on overcoming debt. I hope that you will take the opportunity to read it and find out what can be done to help you with your problem if debt is drowning you. . . .anyway, enough said! Let’s start working on getting out of debt!
Tonight as we contemplate the past week’s newest crises along with the continuing pressure on the global economy created by financial chaos, environmental disasters, and natural disasters, I have observed a curious problem with respect to dealing with indebtedness. I recently spoke to an associate about the tremendous distractions going on in the news when it comes to turning one’s attention from the television to the consideration of finances. Interestingly, the associate knew that the world events weren’t making a direct hit on their circumstances but it was easier somehow to be caught up with the world’s circumstances than to engage the current near term issues of debt! Why should this be? I think that the answer is somewhat obvious. It must be easier to worry about something that represents a worse situation than the situation that you feel that you are in when it comes to getting out of debt. However, it is never too late to deal with the challenge of debt. Never!
So what should one focus on when it comes to dealing with debt. I say pick the closest and hit it the hardest. That may turn out to be a single credit card. It might be the misspending of funds on unnecessary items or the lending of money to folks who never seem to pay you back on a timely basis. Somewhere on the horizon is a challenge to start fresh with your own situation and expect a better outcome that you’ve experienced in the past. If that’s what you need to do, then I say, let’s get going, today!
Recent news regarding the economy continues to be somber. With states straining to provided continuing unemployment benefits while businesses stretch to maintain some semblance of growth, the American worker is in a quandry these days. This quandry may or may not involve indebtedness. It most surely, however, will involve planning at all different levels of our existence. Surprisingly, most workers and their families have committed themselves to a mindset that involves the following.
First, the American worker who has a job at this time, seems to be coming around to the mindset of being grateful to have a job. Over and over, when asked, people are being quoted as being very grateful to have something to hang onto.
Secondly, most workers are truly examining their lifestyles to see what can be adapted to, done without or just plain ignored in light of the recent and continuing economic downturns. This attitude harkens back to previous generations touched by depression, war and trying times. It is out of choices made during these times that the great American hard work ethic seems to have evolved. Wouldn’t it be a major jolt to the world, if the the originality and creativity for which Americans have long been known, suddenly emerged as a by-product of these dire times?
Third, choices that were once automatic for families and individuals as to the use of leisure time and money have taken a decidedly serious turn for the more conservative. Not conservative as often discussed at poitical rallies, but conservative as in not spending it all in one place.
Changes in the economic landscape of our time cause us to need to do something as soon as possible about debt. The wonder of automatic payments for certain expenses can be very helpful in controlling spending. As difficult as this can be to adjust to, automatic payments for the mortgage and some (not necessarily all) utilities can be helpful in keeping one on track about how much money is really in the bank. Also, a separate account from bills are paid can be helpful in giving a sense of the actual money needed to pay off certain bills. The separate account also helps give the accountholder more of a sense of security about not getting confused as to where the money went.
There are a few issues that can occur with automatic payments, however. An event that I’ll call the “train wreck” for lack of a better term occurs when the timing of deposits goes out of synch with withdrawals. When a paper check bounces (yes, that is what we are talking about), there is a certain amount of time that used to occur between the time the person paying found out about the insufficiency of funds in their account. However in today’s digital e-ecommerce based world, a payment that comes from an account that has insufficient funds is flagged almost immediately. You probably don’t have to guess what the sequence of events is next. But I’ll review them for you. First, the payment is presented to the paying institution for action. Next, the institution (your bank) checks your balance. Let me pause here. When there was such a thing as the “neighborhood” bank, you might actually receive a phone call asking about the discrepancy. As I am aware, the only thing similar to this is the provision for another account preselected by you to cover an overage. But continuing on with the steps to the “train wreck”, the bank (your bank) having checked the balance and noting that no other account is available to cover the payment request rejects payment and then punishes you (your account) by charging your for not having the money to cover the transaction. Your account now has two problems, a rejected payment and an unplanned bank charge. The requesting bank (your creditor) represents the request for payment, usually without checking with you. This has been known to actually occur a number of times before the hapless payor is notified regarding the problem. At this point, I strongly recommend knowing your accounts and the conditions under which a “train wreck” is possible. The amount of stress that you will avoid with respect to such an event is well worth the painstaking detail that maybe necessary in tracing this process with your bank.
So, what is the best way to stop the debt “train?” Get control of the credit card spending and reduce those balances as soon as possible. Oddly enough, American consumer debt consists largely of credit card debt but not entirely. Still for the average credit card user, indebtedness is around 12 to 15 thousand dollars. A program to help decrease the debt is to lower spending. A second major step is to target the smallest balance of several cards for payoff.