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Debts and Solutions

(c) 2002 by Cheryl Williams Levey,

Let's take a collective look at our general financial situation. Have you noticed all the financial services companies cropping up all over the place? Daily, we face an onslaught of advertising for everything from easy credit to debt consolidation to bankruptcy. Do you see the paradox here? Get credit beyond your wildest hopes of ever actually paying it off and then turn to debt consolidation or bankruptcy to take care of the problem or to escape responsibility for our own lack of financial awareness or discipline.

Seems a tad convoluted to me, like putting a band-aid on a headache. We need to change our attitudes about money and our personal ability to deal with our own debts. Only when we examine our REAL options can we change our financial futures for the better.

If you are in debt, raise your hand.

I know my hand is raised high, along with billions of other people all over the world. Too many of us have fallen prey to the plastic demon, and we are now saddled with overwhelming debts -- debts that will NEVER be paid off when all we can manage to do is pay the minimum (which is usually about $5 more than the finance charges).

When we realize that our balance remains the same (or even goes up) in spite of regular payments and in spite of not using the card anymore (yes, you need to avoid using them!), we start feeling desperate. We can see the hole we are in, and can't see a way out.

So what do we do? We consider debt consolidation. The concept seems great, but read the fine print. Going this route CAN damage your credit, so think long and hard before doing this. Why on earth wouldn't it hurt your credit? The advisors will tell you it's because you were responsible enough to get help. Unfortunately, creditors don't see it that way. What they see is someone who was irresponsible enough to get to a point at which they needed help. And it will hurt you in the long run. Probably right about the time you want to buy that car or house.

Declaring bankruptcy is even worse. Bankruptcy destroys your financial future for several years. You won't be able to get credit for anything. If you are considering bankruptcy, do you really want to give up that much control of your financial future? If there truly is no other way, fine, but the booming rise in bankrupcy filings is a dangerous trend for people who just want out from under their debts. Don't we all want to rid ourselves from our debts? Thing is, taking a quick-fix route doesn't really teach us anything and it's just too easy to dig ourselves into another hole.

The point is that financial services are popping up all over the place because generally, we have not been educated to make sound and reasonable financial choices for ourselves. We've been lured by our own instant gratification desires and with the ease with which we can feed our appetites with plastic money for pretty much whatever we want. Until the bills start showing up, that is. It's so easy to slide out that card and sign that receipt. But how easy is it to pay it off at the end of the month? Or the month after that? How many months have slid into years of paying on certain credit cards?

Pretty scary, isn't it?

There is a way out, though. It's not a quick-fix and may take years, and it does take discipline, effort and a plan. But it is possible.

Check out The Extremely Simple Financial Plan to develop your plan for financial health.

It boils down to:

  • find ways to reduce debt
  • live a little more frugally
  • increase your income
  • start saving!

In time, it IS possible to be debt-free. It's not complicated, so don't try to make it hard to do. You can do it, it just takes time, a little effort, little changes, and a little knowledge.


Cheryl Williams Levey owns, a site
dedicated to showing you how to save time and money
while growing your home business. Do you have what
it takes to build a home business?
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