It's a No Debt Zone # 1

Everyday we hear from people who are in debt beyond their ability to pay. A large part of this debt is created by unwise use of credit. It might be credit cards, it might be title loans, it might be short term loans from a credit lender. Regardless they suddenly realize their commitment to pay the debt exceeds their income.

That is a frightening time for most. Usually the house mortgage is on the cusp at this point and they face potential foreclosure. Money they need to provide for their family is taken up to absorb the money required for their credit card payments.

Normal choices are to not pay some debts to make sure they can take care of their family. This choice is common sense but is a bit misplaced. Any debt Reconstruction plan must start with the eliminate of any new debt. Borrowing money to pay off current debts is at best a wash if that money pays off a non reoccurring balance. To use it to pay off monthly payments on a debt is a self fulfilling hole. It does not work.

We will cover an approach to help curb this spiral of increasing cost and debt which is multiple layered.

Step One is to stop increasing the debt in any fashion.

Step Two is to find the most likely debt to pay (usually the lowest balance debt), one that can be paid off with current resources.

Step Three is to make only minimum payments on any other outstanding debt with laser focus on eliminating the selected debt.

This is the start, we will expand the solution in later post.

Remember a No Debt Zone is here!