Thoughts on Debt

As a society, we tend to ignore and turn away from things that we don’t like.  Avoiding conflict and problems has been a theme in this country for a long time.  We don’t mean to do it, but somehow we think that if we turn our back to our problems that they will magically disappear.  This is not the case, especially when you are in debt.  The best thing that you can do with debt is to confront the issues head on.  Many people who can’t pay their bills, avoid debt collectors and credit card company phone calls and letters and just hide.  It can sometimes be difficult to deal with these people, especially because when they call they can be very rude at times, and most people actually wish they could pay back their debts and so usually the debt collectors get mean and the people feel bad.  You MUST face the company, even if it is by letter, and you must create a plan in your own mind for repayment.  Even if you send them $20.00 a month.  Now most companies will tell you this type of payment arrangement is unacceptable, some however, will work with you to bring it to resolve.  In any case, you need to devise a plan to repay it.

Now there are, for your information, some debts that it is not wise to make payment on.  These would be the debts that have already exceeded their 7 years on your credit report.  The reason I am telling you this is because one payment on those debts, and they move their way right back to your credit report again.  Once you make even the smallest payment on them, they will become active and will be back on the report.  Some debts unfortunately when they have exceeded their life on the credit report and still don’t get paid, are better left unpaid. These are the ones that will hurt your credit score if paid. Working to clean up your credit is not always an easy task, however some companies will give you a discounted pay off and will pull the item from your report in exchange for a payment, so don’t hesitate to ask for this.  They can do it for you.

Be sure to face your creditors head on.  Talk to them and try to work with them.  Problems if avoided will only get worse over time, so be sure to address the problems and see what you can do to resolve the issues before they get any larger.

Although it is easy to hear all the things that you should do to improve your personal financial situation. Some things are easier said then done. Unfortunately, many of us who find ourselves in debt do so because we were unequipped with the resources necessary to make good sound financial choices, and now there is so much water in our boat that we are sinking quickly without help in sight. Well you will be happy to know that there are steps that you can take now to improve your financial future and insure the fact that you don’t wind up in this same boat again.

There are many resources available online, not only in the form of debt consolidation, but also in the areas of financial counseling and management. There are companies available to help you improve your credit score, manage your money, manage your debt, and help you budget correctly. These resources in addition to the oodles of materials available in your local library can very easily help you get the information you need to make sound financial choices for your future. There are also many shows on TV that can help you better understand money management and how to spend more wisely. Using these resources will help you to better understand the mistakes that you have made and are making and will give you the education in finance that you lacked the first time around.

One simple thing that you can do to help improve your financial situation is to improve your credit score. In order to do this you first need to get copies of your credit report from the 3 big reporting companies. These 3 companies are Equifax, Experian and TransUnion. Although these reports may be similar in nature, sometimes for some reason they contain some different items as well, which is why you really need to take a look at all 3.

According to a Federal Law passed in 2004 you are entitled to one free credit report per year from each of these three credit reporting agencies. You must request these three reports through one agency called annualcreditreport and this can be done through their website online. Once you have those credit reports in front of you, you can see what companies see when they look you up. You can see your credit score, which is the number that has been assigned to your credit worthiness. The scale runs from 300 to 850. The vast majority of people will have scores between 600 and 800. A score of 720 or higher will get you the most favorable interest rates on a mortgage. If your score is on the low end, then you need to work to improve it. One way to improve your credit score is to contact every company to verify the debts that are on your credit report. If you don’t get a response in 30 days, then they must remove these items from your credit report. It can eliminate some of your bad credit by the company just not responding and this is a pretty simple thing to do. Another thing that you can do to improve your credit score is start paying all your bills on time. Make deals with creditors that you still owe money to that if you pay half the balance they will change the negative mark on your credit. Negotiate, they want their money, and may be more than willing to change your credit rating in exchange for payment. Another thing that can improve your credit is to open a new credit card and keep a good payment record on it. If you can no longer get a card because of bad credit, you always have the option of getting a secured card, which in the future will become unsecured as you make payments. This can be a little expensive, but if use properly can be to a means to an end to restoring your credit.