By Drew Harris
In our world of dizzying change, nothing is more true than the
time honored statement that circumstances always change.
No where is this more true than with financial issues.
Have you ever borrowed money, or charged up the VISA card at
Christmas, all the while telling yourself that you would pay everything off with
a coming tax refund or bonus?
Sound familiar. And then what happens when the bonus money
Let me guess. Circumstances changed, the car needed brakes (or
the kids needed braces, etc), and the VISA debt and interest charges keeps
Unless you have a plan, you will always be caught in the
unpredictable grip of "changing circumstances."
This is a slippery slope that can very quickly become serious
financial stress. Consider the fact that Americans are declaring bankruptcy at
record rates. One in every 100 families is affected by a bankruptcy.
I was on this slope 10 years ago. Declaring personal bankruptcy
and filing for divorce went hand in hand.
One of the most insightful moments of the process was preparing
a written log for the trustee of all of our spending for the 5 years leading up
While all of the individual decisions made sense in the moments
that they were made, they looked totally foolish in the context of the "bigger
In other words, constantly changing circumstances drove us off
our financial roadmap.
Consider this five step plan for getting on, and staying with,
your financial roadmap.
Step No. 1 Make a list of what you owe & prioritize. Put
all your bills in a pile. Then list your debts in order, starting with the
largest balance first. Then prioritize your repayments (ie paying down the
highest interest rate first).
Step No. 2 Eliminate credit cards and don't roll over
balances. Once paid off, notify the company that you want to close the account.
Step No. 3 Make a spending plan. Change your
free-spending ways. Track the money that's coming in and going out. Use a debit
card instead of your credit card. Download your bank transactions into a
computer program for easy categorizing.
Step No. 4 Be careful about the equity in your home.
Billions of dollars worth of equity has been withdrawn from millions of homes in
the last few years. But many people pay down credit cards only to charge them up
again - and then you don't have the safety net of the equity in your home.
Step No. 5 Get help. For some people, the problem of
overspending is a psychological one. Spending can become a habit that's as
difficult to kick as alcohol, drugs or gambling. Sometimes, it's due to
circumstances they truly could not avoid: medical bills or divorce or loss of a
You can talk with a credit counselor on a private basis. It only
appears on your credit report if you enter their debt repayment program.
During this holiday season, as you consider your finances,
remember that Americans are now carrying $683 billion in revolving credit card
debt. 47% of the people who paid less than the full amount on their credit card
bills in a recent month, made only the minimum payment due.
The good news is that planning and professional help will
definitely help you turn things around.
Case in point: I went from bankrupt with zero assets living in a
boarding house, to gainfully employed, running my own home based business, with
2 houses and excellent re-established credit.
In other words, it can be done.