Paying down your debt (part 6)

When you cannot make your minimum payments

So far, this multi sectioned (6 part) article has based its recommendations based on the fact that you can make your monthly payments. We have given you suggestions that you might even be able to use that will give you extra money to put towards your high interest debt in order to pay down your debt. But, now it is time to discuss with you the things to do when you cannot make the monthly payments you are obligated to make each month.

Right away – you must make every effort to stop increasing your debt at once. Buying on credit or using a cash advance from one credit card is only delaying your debt crisis. The one thing you have to do is dedicate more of your resources to paying off your debt. The only 2 ways you can accomplish this is to either spend less and or increase your income.

As you figure out how to get out of the debt you have acquired, the first and foremost thing you must do is figure out whether you have the income to make your monthly minimum obligations or not. Budget more carefully to ensure this anyway you can. If you can’t, try paying a different creditor late each month and not the same one over and over. Either way – you have to come up with an immediate plane to get more income – try getting a part-time job until things get under control.

If your income truly is too low to cover your monthly obligations from your bills and debts, you will have to make major life changes. Stop spending on any frivolous items whatsoever at once. This sounds harsh, but it has to, you have to get back on track and you may be able to do it in 3 to 6 months will diligent care. It won’t be forever and the outcome can save your credit standing as much as possible.

Do not take from your retirement plan in order to pay debts if you are under the age of 60, you will incur high penalties such as 40% in taxes on these withdrawals. Borrowing against your 401k is risky. This is a loan that has protection from penalty – but only if you pay it back and stay at the job while the loan is active!

Do not be a person who accumulates debts from making a casual expenditure to another one - and another... After a short period of time you will find that you cannot pay your monthly obligations. You will find yourself trying to pay the bills and realizing that you don’t have the money to do so and you will have to dip into your savings to do so – if you even have savings in the first place. You will then see that your savings does disappear and the vacations you once were taking on a regular basis have disappeared and your quality of life changes and the stress starts pouring on. If you do recognize this is happening to you, make the proper adjustments as soon as you can. Remain free of repeating these spending habits in the future. May marriages have been destroyed by this type of spending behavior. Making sacrifices in time to repair old bad habits can only save you in the long run. You have to work hard at becoming debt free not in debt. If you are experiencing gradual debt increases unknowingly - or have just noticed it – just make the necessary steps to change this from happening. If you have joint credit cards – make certain you are communicating your credit issues with each other in detail. With determination, patience, discipline and true grit – you can become debt free.  

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