Keep Your Sanity While Eliminating Debt!

I know that especially today, debt related stress is growing stronger and stronger. Debt does not have to include insanity. There are ways to reduce your stress and there is no better time than now to free your mind; there is already enough to deal with, with the economy's current state. This is also a perfect time to establish, or repair the lines of communication with your creditors. First off, change the term 'creditor,' to 'Loan Advisor.' After all, these representatives do give you advice on how to handle your loan, and make recommendations; this is what you can expect from an advisor.

I am not a financial expert, but I am a consumer with debt and I have experienced these stress busters over the past month and this has released me from a tremendous amount of debt related stress. The tips in this article is not the is all, end all to debt elimination but it certainly works.

Ask questions. Explain your situation thoroughly to the representative on the other end, and be clear so they can offer you the right services or assistance. After explaining your circumstance, let the representative speak. There may be moments of silence, and as long as it is not more than 10 -15 seconds, do not interrupt, they are thinking about your options. The rep will let you know when he or she has finished. You need to realize that the representatives you speak to work for your creditor. You are not the only person in this situation and if you just ask, there just might be other solutions available to you. If you think a particular tactic will help to keep you in good standing with your loan, say so. Do not be afraid to present ideas to them, no matter how unconventional they may sound. For whatever reason, sometimes lenders have programs or options for you that are given on a "ask and you shall receive" basis. ABC Corporation is just an entity; most of the time, the human beings who work for ABC Corporation have the discretion to work with you. The greatest damage that can be done from this is that they say is no.

Communicate with your "Loan Advisors." Dodging phone calls only intensifies the stress. They will keep calling, and while it has worked, having your one-year old answer the phone and speak their sacred language until the rep hangs up, is not an effective solution either. If you have the money, you have it (and please, pay, it will only work for your good), and if you do not have it, you do not have it. Do yourself a favor and answer the call and tell them you do not have it. Remember, the person on the other line is an "employee," they are doing a service for the lender so be courteous and professional. Tell them you do not have the money right now. Again, referencing the tip above, ask them if there are any alternative or temporary solutions to help you stay in good standing. This shows them that you are really trying, and are making a good faith effort to pay; you will be surprised how their tone changes and what help can arise.

Create a budget! The most important thing any financial planner or debt management counselor will advise is create a budget! It is the most common advice given to those trying to eliminate debt, and is strongly emphasized now more than ever to consumers as a whole. Creating a budget helps you draw the line in spending. Sew up that whole in your pocket and acquire a "flame retardant" attitude; it is critical, MONEY IS FLAMMABLE!

How do you create a budget? Now, if you have never created a budget before, let me say it is tedious. Not painstaking, just tedious, so make sure you prepare yourself well. Set aside time that is uninterrupted, gather all of your bills, receipts, bank statements, and pay stubs. There are three main goals for completing a budget worksheet. 1)To develop a savings plan to fund an emergencysavings account, 2) get an overview of your current financial situation by realizing what your monthly income is and what you normally spend on a monthly basis; this includes fast food purchases and spur of the moment purchases, and 3) establish savings and debt elimination goal. You will have three common categories, "expenses," such as food, insurance, etc, your "average per month" spent on your expenses and your "goal per month." Some budget worksheets do not include an income category but there usually is a designated place to make a note of your gross and net pay. If not, make sure you jot this down before you begin your entries, you will need to refer to the net pay often. Fortunately, because this task is tedious, there are worksheets already categorized for your use. I am a personal fan of the Money Management Planner by Balance Pro. You can also view a list of forms they have available.

If grace has kept you employed, your employer most likely has an Employee Assistance Program (EAP); I strongly advise you to use it. Financial planning assistance is usually one of the primary services. Ask your Human Resources department for more details. An EAP representative refers you to a contracting company based on information taken in a preliminary interview. Balance Pro is a contracted EAP provider. Each EAP contractor varies by employer so check with your Human Resources department.

Stick to your budget! Please, stick to your budget; it will serve you very well and you will begin to see results and feel great about them! I know (personally) how hard it is to stick to a budget, especially when you are used to just going with the flow of spending money until you hear, "your card was declined." I am a firm believer that if you do something for a consecutive 30 days, it can and will become a habit.

It is going to take time so please be patient. Once you have written a realistic budget that allows for a monthly $40 allowance (per family member with income), such as your Starbucks, or treating yourself to a Friday lunch at the end of a hard-worked, work week, you are ready to work your budget. Remember, you are not punishing yourself, but you cannot spend frivolously as before, so you have to make the $40 work. This is the point of "budgeting." Most pay cycles are bi-weekly so this equals $20 every week. Even unemployment pays claims on a 14-day cycle. Of course if you earn a considerable amount of money then you may be able to afford a little more allowance, but it should not be more than 5% of your take home pay. If you have children to which you give allowance, be sure to enter that in your "expenses" category.

If you have over $30,000 in debt, I would suggest seeking a personal financial planner. Ameriprise Financial is a good place to start. They are an individual-user-friendly company, meaning although they offer services to businesses, they do not cater to them as other financial institutions do. Ameriprise is not a debt counseling company but I think they can help you with creative solutions to debt elimination, especially if you own a home, or have other assets.

While we must admit that most of our bad debt is self-induced, that does not mean we have to lose our minds and endure unhealthy stress. So please try it and let me know how it works for you. Of course, I will keep you updated on my debt reduction progress and more ways to reduce debt related stress until our debt is no more! It is worth repeating to remind you to ask questions and communicate with your "Loan Advisor". Your credit reputation and health really does depend on it. Visit KCAL 9 to learn more information on getting out of debt and dealing with your creditors.

Sources: www.balancepro.com, www.ameriprise.com, www.KCAL9.com/business