SOLUTIONS FOR A PERSONAL CREDIT CRISIS

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SOLUTIONS FOR A PERSONAL CREDIT CRISIS
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• It can happen any number of ways. You can lose
  your job. Have an expensive medical emergency.
  Find yourself with three children in college. Be
  an adult during a national financial crisis.
  Whatever causes it, you may find yourself in
  crisis mode money-wise, and need some quick
  solutions.There are a number of ways to get
  through it, to see light at the other end. But
  it'll take assertiveness and perseverance, and
  you will have to make some sacrifices. Here are
  some suggestions.

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•  Be proactive, not reactive. Start working on
  the problem when you see it on the horizon, not
  when you can't bear to answer the phone or open
  the mail for fear of a bill collector.
•  Assess your situation. And take enough time to
  do it thoroughly. Record your regular expenses
  and liabilities. You can do it on paper, in an
  Excel spreadsheet, or in a personal finance
  program or Web site. Pick one system and stick
  with it, so all of your planning will be
  coordinated.
•  Build a budget. Based on that information,
  create a budget you can live with using paper and
  pencil or computer software.
•  Write down everything you spend.
  Everything. Then compare this regularly to your
  budget.

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•  Calculate the money that will come in every
  month and everything that's due every month,
  quarter, and year.
•  Identify payments that must be paid in
  full. This probably includes things like your
  mortgage or rent, utility bills, and insurance
  payments.
•  Contact creditors and negotiate short-term
  payment reductions. Of course, you can't do this
  with everyone, or maybe even the majority of your
  creditors. But you can, for example,  try to
  refinance or consolidate student loans, get the
  interest on your credit cards lowered, and set up
  budget plans with your energy company.

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• Scale back on expenditures where possible. Do you
  really watch all 800 channels on your cable
  system? Cut back to basic cable. Go to the
  library for books and DVDs. Take advantage of
  resources like Mary Hunt's Debt-Proof Living
  columns. Use coupons, visit garage sales and
  Goodwill for clothes and household goods, and
  avoid high-end groceries and restaurants. You
  don't have to go into austerity mode, but cutting
  back 10 here and there will add up.
• Do not increase your debt. You don't have to cut
  up your credit cards, but put them in a drawer
  and don't use them unless you have a dire
  emergency. Concentrate on paying them off.
•  Consider a credit card balance transfer. But
  only do so if you're sure you can pay off the
  balance in the stated time period.

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•  Save 1 a day on something and bank it. Apply
  it to a credit card, put it in savings, or use it
  to buy something you need and have been avoiding
  buying.
•  Consider adjusting your retirement
  deductions. This should be way down on your list.
  401(k)s and such are too important to skimp on
  unless you absolutely must.
•  Ask your doctor about switching any medications
  to generics.
•  Do not rob Peter to pay Paul. For example, do
  not use credit cards to buy groceries or pay
  bills.

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•  Save on energy. Raise or lower thermostats more
  than you usually do. Combine car trips where you
  can. Use the vehicle with the best mileage
  whenever possible. Have your furnace tuned every
  year. Use cold water in the washing machine.
•  Make gifts instead of buying them. It'll save
  money and mean more to the recipient.
•  Adjust your tax withholding. If you're getting
  a refund, you're giving the government a loan.
  Adjust your withholding at work to decrease your
  estimated payments, and you can use that money
  now.

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• Evaluate your phone service. Do you know what
  extras you have, and do you need them? Can you
  get by with just your cell phone and drop your
  land line? If your contract is nearly up and you
  don't use the phone much, consider a prepaid cell
  phone.
• Any one of these ideas taken alone wouldn't
  seem like it would save enough money to make it
  worthwhile. But do enough of them, and you'll
  probably be surprised how much you can save. Use
  that savings to retire debt, and you'll
  eventually have enough money to spend on things
  you've been avoiding. But try to stay out of debt
  and in the money.

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