There are times when the unexpected happens. The recession sparked off by Wall Street was certainly one such time and it caused widespread financial misery some of which still exists. While the recession has faded in many places it cannot be completely forgotten. Businesses that have a significant export business may still find their traditional markets are slow; there is so much economic interdependency these days. While consumers have become more confident there is still danger lurking. One of the obvious issues in today’s world is the need for self restraint. The price of oil has fallen and that should reduce prices all round; those that businesses as well as consumers face. If consumers have more disposable income and there is an environment of cheap money because of low interest rates it is easy to get into financial trouble. It is as though the lessons of the recession have not been learnt.
How Are You Doing?
If you take a moment to think about your own personal situation you will be able to identify whether you are in control of your finances. There are many people who aren’t and face regular calls from debt collectors looking for settlement for their clients. The calls will stop if you write to request that; it does not mean the debt will go away unfortunately.
It is likely that your credit score will be suffering almost by the day. Even when a debt is settled a record of arrears can remain there for years. It is important to get a commitment in writing from your creditors that they will remove any reference once the debt is settled. You can check that this is the case when the money is repaid. Without your creditor’s agreement beforehand it is unlikely the creditor will do it voluntarily and there is no legal obligation to do so.
Ideally you should look to work with your original creditor rather than a debt collection agency who will be receiving commission or a percentage of the debt. The original creditor is likely to be far more amenable to a settlement offer.
It seems that the level of debt in the community is rising once again. The difficult years of the recession are so recent yet cheap money and temptation are both pushing people into situations where their finances are likely to get out of control. There are often valid reasons to borrow; cheap money allows real estate investment for example but easy credit also takes consumers into the convenient world of credit cards. Convenience is the plus; the minus is the crippling rate of interest charged on balances that are outstanding at the month end. In no time at all it is possible to build up a core debt that simply will not go away because the minimum monthly payment barely touches the outstanding figure.
It is not a sign of weakness to seek help. If you write down your current income in one column and your monthly commitments in another you will have a general picture of where you stand. You then need to seek professional advice for an appraisal of your position. It will be objective and may involve your facing some questions you would rather not be asked. This will only work if you are prepared to be completely open about your situation.
You may never have had a financial plan before or if you have it has gone wrong. That is the nature of something that is not an exact science. In an ideal world your plan should cover the short to long term. That means handling your monthly commitments as well s providing for retirement no matter how many years away it might be. It should include a strategy to get rid of serious debt on which high interest is being paid. That may be done with a consolidation loan. The point is that professional help is likely to be the best way to solve a problem and prepare for a better future.