There’s no doubt about it, we live in a tough economy today. There are still quite a large number of people that are out of work, and cash savings are still fairly slim. For many people, it’s all they can do just to survive from one day to the next. So what happens in situations like these?
I’ve seen it time and time again where families are just barely surviving, and then something terrible happens. Perhaps the furnace dies on them, or the roof needs repair, or maybe the car needs a new transmission; an event springs up that just can’t possibly be paid for unless they use credit. What else can they do? There’s no other option.
Okay. So now they have a couple thousand bucks on the credit card. Money is still just as tight as it was before, so all they can manage at this point is the minimum payment, which means that the balance on the card is not going down (or if it is, it’s miniscule). And then the unthinkable happens again – another unforeseen expense that needs to be paid. On the credit card it goes. And the balance continues to rise.
Of course there are some instances where people rack up debt with fancy cars and expensive watches, but I’d say that for the most part, it’s the unforeseen expenses that drive people into real debt, or at the very least, it’s what pushes them over the edge from ‘easily making the payments’ to ‘there’s no way I can pay all these bills and still buy groceries’.
If you find yourself in a situation like this though, don’t lose hope. There are still options. Most likely, throughout your many years of payments, you must have developed a few assets that are worth something in the general market. Perhaps you have some equity built up in your house, or maybe your car is worth more than what you owe. Whatever the case may be, you could always sell those items of value in order to pay down your debt, which would in turn reduce your payments and make your life more manageable.
There are certainly cases where those assets can be tough to find (especially if you purchased your home prior to 2007), and if you have very little that you could sell, then perhaps it would be best for you to seek out a debt management company. In most cases, they’ll be able to help you restructure your debt in such a way that would allow you to make your payments given your current salary and lifestyle. Ideally, you would use this resource to rid yourself of debt and start living a life of wealth creation for yourself, and not for others!