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Get Out Of Debt Reality Check

Nov 27, 2007
In many cases human nature is expressed as impulse before thought or in economic terms buy now, pay later. The character of deferred payment is complicated by convenience of credit cards, loans and mortgages. In every case the economic theory is based on an assumption that you can afford to make the payments of principal and interest on a debt without change to your present ability to earn an income.

However, reality teaches us that theory is not the same as practice. Our circumstances are always changing. For example, unforeseen market changes like in sub-prime mortgages, job loss, injury, or illness can change your ability to pay your debt in an instant.

Other human characteristics that contributes to unmanageable debt includes not knowing how to budget, not sticking to a budget, emotional roller coaster type of binge spending, shopaholic behavior needing to buy special offers, big discounts, or new stuff like tech toys, clothes, games, etc. without regard for ability to pay.

In order to get out of debt fast you must recognize the fact of planned and unplanned change. You must be able to adjust your spending up or down according to your circumstance. The sooner you can react to change and forecast adjustments, the easier it becomes to manage and ultimately eliminate your debt.

Short term adjustments may include paying off your debts one by one, in a timely and an orderly fashion. Acting quickly to inform your creditors makes it easier to negotiate adjustment of your payments that may in turn get reduced rates, waived fees / late charges, etc. where possible.

Another popular way to get back on track is to consolidate your debts into one loan and pay it off with lower monthly installments. There are many different ways to consolidate debt. The most important step in this direction is to shop for the best terms and lowest interest rate. Terms are usually connected to collateral or what assets you have to secure your loan principal. You'd be surprised to discover that terms of collateral vary even more than interest!

The best case scenario in a consolidation loan is to get enough money to cover all your debt at a rate that you can afford to pay and terms flexible enough for future adjustments in payment up or down. In some cases this may be as simple as getting a line of credit or extending one enough to get back on track.

The worst case scenario is bankruptcy because you lose credit worthiness and it will take years for you to rebuild your credit after discharge. The few opportunities for credit after bankruptcy are undesirable because they tend to lock you into a debt payment rut that can multiply the years and increase the cost to become debt free.

However, between the best and worst scenarios are solutions that can help you get rid of your debt, relieve stress, avoid bankruptcy, and create opportunity to control what's left of your life. Another article to consider is "7 Little Things To Get Out Of Debt Fast" at www.h4h.biz/debt-advice. No pain, no gain, because while these things may sound easy to do, they require significant effort to get the process of debt management under control.
About the Author
Brian Hack is an Internet business analyst that distributes software and ebooks at www.info-publishing.biz. More articles about debt advice can be read at www.h4h.biz/debt-advice . Contact Brian: author@info-publishing.biz
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