In looking at many of the most common debt relief options, there is literally a plan for just about everyone. In order to make the right decision for your individual situation it’s always best to consult with a qualified and reputable financial professional. Listed below in no particular order are 3 of the most common options to clear debt from your life –

1.    Credit Counseling – this process refers to the act of paying an agency to make your payment for you. It’s particularly attractive to borrowers that have the funds available to make their payments, but that lack the initiative to ensure that all of their creditors are paid on time.
2.    Debt Settlement – this process involves a company that works on your behalf to negotiate directly with your creditors. The goal here is to agree upon a significant reduction in the total amount you owe.
3.    Bankruptcy – often considered the most severe form of financial repair, the personal bankruptcy process under Chapter 7 attempts to eliminate large portions of your debt. You must be approved to file based on your financial situation, and if approved, you will experience a significant blow to your credit rating.

Ultimately, dealing with debt is all about looking at your individual situation and applying the best possible solution. With so many different options available, finding the right one is all about working with a financial professional to determine the best course of action.

The first thing you have to look at when budgeting is what you’re spending your money on.  What are your bills each month; health and car insurance, internet, TV, telephone or cell phone, and any others.  Any expense that you owe monthly, regardless of how large or how small the amount, it all adds up.  You can call the lenders and see if they can provide you with better interest or anything that can help you get caught up quicker or make smaller payments, without jeopardizing your credit report.  Whatever you do, don’t fall into the trap of saying “I will pay it next month” or any other reason to have late fees or payments.  All that can ruin your credit score and you want to keep that good or you will have to rely on loans for people with bad credit loans for people with bad credit later on.

Check what the competitors are charging and see if you can switch companies on such bills as internet, phone, TV, etc.  Keep in mind that even if it is only $50 or $100 each month in savings, that adds up through the year.

Did you know that your credit score also has a determining factor on what you pay for car or house insurance?  Keeping your credit report and score high is a great way to actually save yourself money.  Keeping your credit repaired and maintained is an important role in your finances.

I will use myself as an example. Being a 35 year old bachelor, much of my social interaction is at lunch time and evenings out with friends. I will stick to lunch for this example. If I go to a non-fast food restaurant, on average I will spend roughly 12 dollars including tip. If I do this 3 times a week, that is 36 dollars. Multiply that times four weeks and  is just under $150.00. This is really a conservative number too.

You can see from the previous example how eating can really blow a whole in your bottom line. Discipline is key, but if I cut eating out to lunch to just one day a week I am saving an extra $100. a month. That could go towards savings, or paying down debt. This is just another example of how you can save money.

I average spending about $11.00 a day on lunch or roughly $220 a month. That is just on lunch. This is completely ridiculous. In all honesty, it is a bit embarrassing for me to admit that I do this! So how am I going to deal with this monumental waste? By planning ahead.

I have a rough budget that I follow, and yes I factored in this current cost. What is going to happen is the following. First, each Sunday I will sit down and plan out what I am going to eat each day for lunch. Seriously, I am writing down a list for Monday-Friday. One of those day will be a day where I eat out. The reason for this is social/networking. The current job I have is through networking and staying in contact with old coworkers and friends. Next, I will take that list to the grocery store and buy what I need. Finally, I will post on here about it on Saturday as a way of accountability to see if I stuck to my budget. For the moment, I am scheduling $30.00 for lunch money through the week.

This is part of the battle. Identifying where my week areas are and fixing them one at a time. I know there are plenty more, but this is the next step. Once this is under control, I will improve another area. Keep in mind, I am still paying down debt so every improvement is speeding that process along.

-Kevin

If you go to the link above, it is an interactive chart. However, I just took a screen shot to show something. If you look, you will notice that every downturn is small and short followed by long periods of growth. Yes, this economy is bad at the moment. However, it is not the end of the world. We will see another period of growth soon.

What these short periods of recessions tell us is that we need to be prepared. Clearly screaming at us that an emergency fund is needed. As well as being diversified with our investments. As you get closer to retirement age, you should be moving away from stocks. All too often we get complacent in the periods of prosperity, only to panic at any hiccup. Plan ahead and you will be just fine.

-Kevin