Obviously‚ every average American can’t just vote to raise their own debt ceilings by a few trillion dollars‚ but there are steps that can be taken to improve a person’s debt situation. For some‚ though‚ the situation is beyond repair. Bankruptcy in Los Angeles can be a good option for those struggling with consumer debt and looking for answers. Consulting with an experienced Long Beach Bankruptcy Lawyer should be your first step to investing in your financial future.
Forbes recently came out with four tips to help people to deal with their own debt ceilings:
See if you can refinance debt with a lower interest rate: This can be tough‚ but it may be possible to transfer high interest rate balances to credit cards with low or even zero interest rates for at least a period of time. But there are pitfalls — transfer fees and high rates after introductory rates expire.
Another possible option is borrowing from home equity and your retirement plan. While home equity loans tend to be tax-deductible‚ they require good credit and some equity. Retirement plan loans don’t require a credit check and the interest goes back into your own account‚ but your money won’t be growing for your retirement and you may owe taxes‚ plus a possible penalty.
Find out where you’re spending and try cutting back: Many people believe that a $100 per month cable bill is a necessity‚ but that’s $1‚200 a year that could be applied elsewhere. The $80 a week you spend on eating out adds up to more than $4‚000 a year — another big savings.
Look at three months of bank and credit card statements and keep track of spending. If there’s not enough fat to cut‚ consider prioritizing spending on food‚ utilities‚ housing and transportation. While not ideal‚ it’s better to miss a credit card payment than possible lose your house or vehicle to foreclosure and eviction. Be careful though‚ missed payments will hurt your credit and can trigger high default interest rates.
Start paying down debt: If you can free up some savings through that plan‚ begin paying off a balance on the highest interest rate loan‚ if possible. If you’re having trouble making the minimum payments‚ it may be possible to work out an affordable payment plan with creditors‚ though they are rarely interested in talking.
Stick to your own “balanced budget amendment”: Most people consider student loans and home loans good debt because the assets are likely to appreciate in value or increase earnings potential. With home loans‚ that may be more accurate today than it was three years ago‚ as prices have fallen dramatically in many parts of the country. Consider reserving borrowed money for things that will appreciate or that help you bring in money — like a car for driving to work.
Review every expense that happens every month and take non-monthly expenses like vacations and holiday shopping and break them into monthly amounts. Try to use a fixed cash amount for spending and work to save three to six months of expenses in an emergency fund.
These are all good tips and in order to have a healthy financial future‚ bankruptcy may be the best option. Consult with an attorney today who can assess your situation and determine whether or not these plans are the best way to get you stable financially.
Los Angeles Bankruptcy Attorneys will provide a free consultation to help guide you in making a decision that works for you. In Encino‚ Glendale and Los Angeles‚ just call.
If you need to speak with a foreclosure litigation attorney in Los Angeles‚ Encino or Glendale‚ contact Cal West Law at (818) 446-1334 for a free consultation.
4 Steps to Deal with Your Own Debt Ceiling‚ by Liz Davidson‚ Forbes.com