Do you still stop by the pizza place for your lunch? Do you still fill up on drive-through coffee every morning to fuel your commute in to work? Do you still pick up a burger and fries on your way home?
If you have the money to outsource your meals, your snacks and your coffee, then you are probably using it to your best enjoyment. But if your debt is mounting, eating out and even eating take-out is not a very wise move.
And if you start having to scrounge for change to pay for that iced cappuccino, that is a clear sign that you really are down to your last dollar… and that alone tells us that you could use some help better balancing your budget and managing your debt load.
Ironically, those coffees, snacks and meals you grab during the day are not just luxuries that need to be avoided because of debt; those luxuries are probably part of the reason you are in over your head. Sure, one take-out coffee is not enough to put anybody in debt. But a daily ritual adds up over a few years.
According to Consolidated Credit Counseling, people should not be ashamed to seek help when they need it. We seek the help of doctors when we are sick. We seek the help of plumbers and electricians when our houses are in need of repair. We should be just as ready to seek the help when our finances are in trouble.
And options do exist:
- Bankruptcy
- Credit counselling
- Debt settlement
Bankruptcy
Bankruptcy is the most severe option, and the one you might be stuck with if you really went to far and cannot climb back. But it is also the most disruptive. When you declare bankruptcy you really have to start all over again, and it can be long while before you bounce back.
Not surprisingly then, most people do everything they can to avoid bankruptcy. That is why credit counselling and debt settlement companies exist.
Credit Counselling
Credit counselling is not the same thing as debt settlement. The idea of credit counselling is to find the best path for you to manage your finances and pay off all your debts properly, then budget to keep yourself out of debt in the future. The goal is to avoid bankruptcy, and also to keep your good financial name intact.
Before contacting a credit counselling service, be forewarned – you will have to step outside of your comfort zone. Way outside your comfort zone. You will have to follow a very strict and frugal budget.
In order to come up with the cash to pay down the debt, you will likely have to cut spending deeply. It is by overspending that you most likely got into this mess in the first place. That is your comfort zone and that is what needs to be overturned.
Debt Settlement
Debt settlement companies offer a different service. They offer a bit of a shortcut by getting some of your debts paid off at a lower rate. This can be very tempting, and sometimes even necessary. But it comes with a price. They don’t help you solve the problem that got you into the mess. They don’t help you fix your budgeting.
It is fair to note that debt settlement works with only some debts, and some might still come back to haunt you.
And both credit counselling and debt settlement companies do charge a fee; even not-for-profit services cost something.
It stands to reason, if you are considering either credit counselling or debt settlement, that you are determined to avoid bankruptcy. If you are determined enough, you can cut your spending and fix your problems. If you are not determined enough, the comfort zone will win. In many ways, this is like dieting, but for your personal finances.
So back to those pizza slices and take-out coffees and drive-through French fries. They are not helping you balance your budget. They are not helping you avert bankruptcy. And in many cases, they are not helping your diet (but that really is another story altogether).
source: financialhighway.com
