Avoiding Financial Catastrophe
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The best way to avoid financial catastrophe is to eliminate
debt and spend within your means. Debt elimination may mean
downsizing or getting rid of some things. Take a hard look around
you.
Then take this quick financial self-assessment:
* Do you have one or more expensive cars with high payments
each month?
* Are you living in a house that is really more expensive
than you can afford?
* Are you eating out frequently?
* Do you have expensive cell phone plans for everyone in the
family?
* Is your cable TV plan loaded up with premium movie channels?
* Do you carry credit cards that you use indiscriminately?
The first question to ask is: Are any of these things a matter
of life and death?
Certainly we all need to eat and we all need basic shelter
and transportation, but almost all of us fall into the trap
of rationalizing the purchase of items that far exceed the
requirement of satisfying the basic need.
The second question to ask is: How can I get out from under
these excessive or unnecessary expenses and right size my
financial obligations?
The answer in some cases may be surprisingly simple.
* Cancel the cable.
* Stop eating out.
* Eliminate or cut back on your cell phone plans.
* Cut up your credit cards.
The answer in other cases may require more work. Like most
people you have probably taken on debt and other financial
obligations that are not easy to get out of. You may have
to work harder to eliminate some of these other things from
your life.
Put your house up for sale and move into a less expensive
one. In the current economy this may be more difficult than
you would like it to be, but it is often doable. If you owe
more than the house is worth then you may need to visit with
your bank about accepting a short sale offer. Make sure that
your agreement is one that doesnt put you on the hook
for any deficit in the future. Many banks are willing to accept
short sale prices (an amount less than what is owed) and call
it good. Others may accept the price but want you to be obligated
to the difference. This is not a good outcome for you. Be
careful to ask about this. Either way, you will want to get
out from under the burden of financial debt associated with
our extravagant and excessive house payment. Some creditors
will also allow you to restructure your loan and make interest
only payments or otherwise reduce your monthly outgo, at least
for a time while you are trying to sell the house.
Put your cars up for sale. Again, you may find that you owe
more than they are worth. It may mean another trip to the
bank to explain your situation and ask them to work with you.
They may restructure your loan or allow you to turn the car
back in. The key is to get rid of these enormous financial
burdens and then replace them with something sensible. Maybe
a smaller, reliable, used car that gets good gas mileage and
doesnt come with a huge payment. If you can pay cash
for a used car that would be the best possible thing.
Just get out there and do it. Gaining
control of your financial future starts with making ONE good
financial decision no matter how small. You will be
surprised at how much better you feel just by calling the
cable company and cancelling the cable. It may not mean that
much to your bottom line but it is the start of a new financial
path that will lead to financial peace of mind and an ability
to live within your means into the future.
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