Today’s problem is that consumer debt is at an all-time high. Many factors may have an impact on the consumer’s ability to make their minimum debt payments including but not limited to:
“There’s always a way – if you’re committed. ”
-Tony Robbins
Debt settlement is an aggressive alternative for many consumers facing issues with their unsecured personal debt. For a consumer with a positive cash flow, it may be a viable alternative to bankruptcy. In debt settlement, consumers may be able to pay a percentage of the balance that is owed to a creditor in a lump sum settlement.
“Debt is like any other trap, easy enough to get into, but hard enough to get out of.”
-Henry Wheeler Shaw
More than eight out of 10 people with debt problems say their financial difficulties are having a negative effect on their lives, jeopardizing their personal relationships, health and ability to carry out their jobs, according to a debt counseling charity.
Studies show that debt problems had adversely affected the relationships that 37% of the 372 clients surveyed have with their partners and 22% with their children.
This might explain why many people choose to keep their problems hidden from those who are close to them: when asked who they had told about their difficulties only 34% named their partners, 20% their friends and 16% their parents. A further 10% said they had told no one, citing shame, embarrassment and a difficulty to “acknowledge that you are an adult and unable to manage your finances” as reasons for their silence.
Nearly half of those questioned said their problems had a very negative impact on their health, with some suffering a nervous breakdown, loss of hair and palpitations. Only 6% said it had no effect.
For some people debt affects their ability to do their jobs, with people saying “work has become difficult due to the constant worry about debt”, and that they “find it difficult to concentrate some days” as they were “continually worrying about money”.
A small percentage of people have a debt problem because of overspending, a majority of people have a debt problem because of a pay freeze or reduced working hours, while others were left over indebted because of a relationship breakdown, illness or having children.
This busts the myth that recklessness with credit is the main cause of debt problems. Rather it is life itself over which we often have no control. Such people need sympathetic and practical support to guide them through this crisis so it won’t scar them and their families for life.
“His brow is wet with honest sweat,
He earns whate’er he can,
And looks the whole world in the face,
for he owes not any man.”
-Henry Wadsworth Longfellow
The Village Blacksmith
Life can look like a scary nightmare when you are submerged in debt. You are certainly not the happiest man on earth when the accusing fingers of your creditors are constantly pointed at you. However, it is possible to defy financial adversity and come out of debt. Your job will become easier if you acknowledge the problem before it becomes a menace. It is important to understand at the right time that your finances are getting out of control. So watch out for the following warning signs before your monetary condition becomes truly critical:
1 – You Use Credit Cards to Buy Everyday Items
You need to do what you should do to feed your family. But if you have to buy groceries with a credit card then it’s a sign of a deeper issue. It indicates that you do not have enough money to sustain your lifestyle. So either increase your income or live by your means. Also, if the balances are getting high and you are over the limit on one or more credit cards then it reflects the fact that the situation is alarming.
2 – You Stop Taking Phone Calls as it Might be the Lenders
This happens when your accounts have become delinquent. To be more specific, you can no longer make payments to your creditors. You are desperately trying to evade the lenders by avoiding their calls even though you know it’s futile.
3 – You Borrow Money to Make Monthly Payments
When you start borrowing money from relatives, friends or take payday loans to save your neck then you definitely have too much debt. You refuse to accept the fact that you cannot borrow your way out of debt. This exhibits that excessive debt is affecting your rational reasoning.
4 – Your Work Performance Has Taken a Hit Due to Debt
If your financial troubles are following you to the workplace then it is surely a warning sign. A performance drop is surely an indication of too much pressure due to (in this case) excessive debt. Possibly it is time to act smarter because losing your job at a time when you need it the most will make only make things worse. Likewise having sleepless nights is also an omen. Although it is difficult but try to stay calm and stress free even in a difficult climate. It will help you to clear the dark clouds of debt.
5 – You Embrace Alcohol or Narcotics to Escape the Real World
It is certainly not a good sign if you turn to drugs and alcohol to remain oblivious of the mess you are in. It means you have given up and think that there is not even a remote possibility to get out of debt. This again is a proof of the terrible financial condition you in and what debt can do to human psychology.
6 – You Lie to Friends and Family About Your Spending Habits
A person lies to his loved ones about his spending only when he is in the red zone. You know that your nearly empty pocket does not support unwise financial habits. So you start hiding facts from friends and relatives. This clearly shows your economic state as well as how addicted to debt you are.
7 – Your Savings is Nil
If you have drained your savings to make ends meet or to pay off your debts, then you better understand that there is a problem. It simply means that it is taking every penny you earn to survive. Try really hard to save money even if the amount you contribute is absolutely insignificant.
8 – You Pay Your Bills Late
Does your bill include more late charges than before? Well, you are probably driving down the danger avenue. Living paycheck to paycheck is a reflection of the fact that you do not have enough money to pay the credit card bills and similar stuff.
“Be assured that it gives much more pain to the mind to be in debt, than to do without any article whatever which we may seem to want.”
- Thomas Jefferson
In letter to his daughter.
1. Crisis Stage
This stage is where you realize you are struggling to keep up with your growing debt, or when you start fearing the phone and mailbox due to collection calls and letters. In some cases, the Crisis Stage is when it is most important to take action. The Crisis Stage is often short-term (1 to 3 months).
2. Coping Stage
People cope in different ways. Some ignore the problem hoping it will resolve itself and go away. Other people find something or someone to blame for their problems (like an ex-spouse, family member or the government). People who successfully cope with crisis usually find help and support from family, friends and trusted advisors. The Coping State is usually on-going.
3. Comfort Stage
The Comfort Stage is when the person coping with a Crisis, has admitted there is a problem, found helpful coping resources and is starting to improve the situation. This stage is when the stress begins to end and the person is healing financially and emotionally.
The time-frame for finding comfort from your credit crisis depends on your ability to recognize that you are in a crisis, gather your strength, using resources and facing your credit problems head-on.
