What is your deal???

Are you employed currently?  Are you in an industry where employment is likely over the next year?  Do you really see your income situation improving over the next six months?  Are you tapping in to savings or retirement in order to make ends meet?  Are you already late on your payments?  Soon to be?  Or, have you just given up on paying your bills and hoping for the best?

Your immediate goal is to develop a plan for dealing with your debt.  In order to develop a plan, you first need to take a good, honest look at your income and employment situation.  Be conservative.  After taxes, what are you/your family really bringing home in monthly pay?   Can you count on this for the next six months?

Next, what does it cost you/your family to live every month?  If you’re like most people, you may need to spend a bit of time answering this one.  A helpful tool in capturing expense information is a budget worksheet.  I found a pretty good one at http://www.capitaldebtsettlement.com/forms/CDS_Budget_Analysis.pdf. 

Subtract your monthly expenses from your net monthly income.  What’s left?  If the answer is zero or a negative number AND THIS IS NOT LIKELY TO CHANGE IN THE NEXT 6+ MONTHS, consult with a bankruptcy attorney.  Do not continue to use your savings to subsidize the deficit.  Do not borrow from family (in my opinion, unless you can take funds as an early inheritance, you are really setting yourself up for BIG potential problems if you find yourself unable to pay your family member(s) back) .  Do not do nothing.

Coming next:  I have money left over.  What now?

You applied for it.  You spent it.  You owe it.  Now, you cannot afford it.  What do you do now??

First of all, you’re not alone.  Hundreds of thousands of Americans are falling behind on their debt (credit card and mortgage) payments every month.  Some of you spent pretty conservatively relative to your neighbors over the years.  Some were leading the pack in consumption.  Nobody planned or even could plan for the type of financial and economic meltdown we have seen over the past year.  So, here you are. . .

What now?  Bankruptcy?  Use savings and retirement funds to keep bills current?  Enroll in a debt management program?

This is the point where you could use some good, unbiased, educated advice and guidance.

For starters, don’t plan on the economy to turn things in your favor any time soon or our current government administration to get help down in to your hands.  You are pretty much in this on your own (or as a family) and the path you take will ultimately be your decision.

Bankruptcy?  Using savings or retirement funds to pay debts?  A debt management program?

Truth is, under the right circumstances, any one of these could be the right short or long term solution for you.

Coming Next:  What’s your deal??