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Solving Financial Problems
 Jun 08, 2004


Solving financial problems is not always easy. But the first thing to do is identify the financial problems then educate yourself on what you can do to reduce or solve the problem. This article will discuss some things you can do to start resolving your debt.


It may seem as though financial problems are out of your control. When you are in debt and having a hard time making ends meet, it can seem as though nothing you do will help the situation. However, this isn't true. There things that you can do to take control of your financial situation. It is possible for you to begin solving your financial problems.

Things you can do to reduce financial problems

The first step to solving financial problems is to identify them and then to figure out what you can do to make the situation better. Once you admit that you have a problem, it is time to start fixing it. Here are some things that you can do to begin solving your financial problems:

Create a budget. This is step one. Creating a budget requires that you take an honest look at your personal finances and realistically determine how much money you have coming in and how much money is flowing out. Then you need to look at your expenses and cut back on everything that is not actually needed. This will give you an idea of where you are, and what you need to do. In some cases, it may be necessary to get a second job or find some other source of income. Realize that an essential part of this action is to stop spending more than you earn, and to stop amassing any more debt. It takes discipline to create a budget and stick to it.

Contact your creditors. It is true that contacting your creditors is not very pleasant. However, this is a vital step in the process of solving your financial problems. You need to let your creditors know what is happening, and explain your case. If you make it clear that you are willing to meet your obligations, most creditors are willing to work with you. They might be willing to arrange a modified payment plan and/or reduce your interest rate in order to get your payments to a level that you can manage. Be aware that in many of these cases, though, your creditors will freeze your accounts until you are back in good standing.

Know your rights under debt collection law. If you are feeling harassed or overwhelmed by creditors and debt collectors calling, you should know your rights. Debt collectors cannot harass or attempt to intimidate you. If you ask them to stop contacting you, in writing, they must halt their calls. While they can still send legal notices, they cannot call you over the phone. If you feel badgered, be aware that there is recourse under the law. (See the Web site of the Federal Trade Commission, www.ftc.gov, for more details.)

Debt management and credit counseling. It is okay to seek help if you feel that you need it. Many people find that debt management services and credit counseling agencies can help them get organized and make payments more easily. You can learn about such options as debt consolidation and debt negotiation. Additionally, you can become educated about credit and how to repair it. Many debt management services and credit counseling agencies can help you put together a plan that you can follow as part as solving financial problems.

Bankruptcy. Even though bankruptcy has begun to be viewed as a debt management tactic, it is important to realize that bankruptcy should be a last option. New laws have made it more difficult to file Chapter 7 bankruptcy, and there are other effects of the procedure. Your credit score can be damaged for seven to ten years, making it difficult to move financially. Only if your problems are so overwhelming that there is no escaping them should you consider bankruptcy.

For the most part, solving your financial problems takes a good deal of work and self-discipline. You will have to realize that substantial life changes are needed; financial problems are not things that you can solve with a "quick fix." They require plans and dedication to overcome. But, it you are vigilant and work hard, you can soon overcome financial problems. And if you stick to the life changes you make while defeating your problems, the chances are that you will not have these financial problems again in the future.



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