Getting out of debt is something that not only takes a debt management plan of some sort, but it is kind of like losing weigh in that it is a lifestyle change. Even if your debt is the result of being unemployed, in most cases it also has to do with poor planning or overspending. If you prepare properly, you should be able to survive a six month period of unemployment.
In order to be able to survive unexpected circumstances means you have to have a Plan B and this should be an emergency fund. Call being unemployed what you want, but it is an unplanned event that requires an emergency fund and if you do not have one then you will resort to other means of paying expenses. For many, this will mean using credit cards. By the time your employment situation changes, you could be many thousands of dollars in debt.
Money should come before having possessions. With credit cards being as unstable as they are right now, there is no substitute for cash. When you go to pay your mortgage or buy groceries, you reach for your cash and there is no way of getting around it. This does not mean that you cannot have the things you want. They just have to come after financial stability.
A person has no business taking on a designer mortgage just so they can have a bigger house. If you cannot afford the payment with a fixed rate loan on 25% of your take home pay, you should think again. Once you put yourself in this situation there is no going back and the consequences can be quite severe. The financial institutions were no better. They gave mortgages and credit cards to anyone that could sign their name, whether they were credit worthy or not.
The current economy is still not completely stable. If you do not fund your emergency account, you could find yourself out in the cold. Credit card companies are closing accounts, decreasing credit limits and raising interest rates without warning. There is no guarantee your credit cards will be there to bail you out in times of need. Make a plan to put yourself in a financially secure position.
Marjorie is an author that enjoys writing about health and finance. You can visit her latest site at http://www.debtmanagement1.com where you can find information on debt management plans.
Mail this post