Harris: Reducing Old Debt in the New Year
By Charlestien Harris, Retired Financial Coach at Southern Bancorp
If you are like many people, you may have overdone it a bit when it came to spending money on holiday gifts. You may have even swiped your card more often than not to pay for those purchases. Don’t panic – there is hope, and there are steps you can take to eliminate that debt in a timely manner.
As a counselor, the biggest obstacle I have encountered with my clients is that most of them do not know how much debt they have to begin with. This is a crucial step in the process of debt elimination. Now, let’s take a look at some solutions that can help you resolve your debt issues.
1. Know how much debt you owe.
This is the first and most crucial step in debt elimination. Start by making a list of all the creditors and individuals you owe. This will give you a general idea of your total debt. This step also forces you to recognize the extent of your debt and helps you decide which method of debt elimination you might choose.
2. Research all your options.
There are many options to consider when it comes to debt elimination. You can do it yourself (DIY), or you can explore other options such as developing a debt management plan, selecting a debt consolidation plan, settling the debt, taking out a debt consolidation loan, or even considering bankruptcy. All of these options are viable solutions, but proceed with caution. Carefully weigh the pros and cons of each option, and then determine which one best suits your personal needs.
3. Make an informed choice.
Once you have completed your research, the process of elimination begins. Carefully consider which option will work best for you. Make a list of your debts so you can review all the information you have gathered and make a well-informed decision. This is another crucial step because you do not want to end up in more debt than you started with – that would defeat your goal of becoming debt-free.
4. Develop an action plan.
One of the biggest obstacles to progress is procrastination – putting off until tomorrow what you can accomplish today. Keeping plans in your head instead of on paper can delay action. When you have a written plan in place, it helps you stay organized and see a clear path toward eliminating your debt.
5. Set clear goals.
Goal setting is another critical step in this process. How do you know you have reached your destination if you do not know where you started or where you are going? Setting goals helps you establish a clear path to achieve your desire to eliminate debt. Be specific about how much debt you have and how you plan to accomplish the task. Give yourself a timeline, and make sure you can measure your progress. Celebrate your successes – even small ones – as you make a dent in your total debt.
6. Seek professional help.
Professional help is available, so take advantage of this option when necessary. There are many resources in this area, but be cautious – not everyone has your best interests in mind. Some businesses are for-profit, and their services come with fees. Southern Bancorp has AFCPE-certified financial counselors, as well as HUD-certified housing counselors, on staff to assist you in understanding your financial options for debt elimination and other financial topics. To learn more about these services, call or visit your nearest Southern Bancorp branch.
Consider all your options before making a decision about developing a debt elimination plan. You can avoid costly mistakes simply by taking the time to do your homework. And don’t forget that all-important budget! If you create a budget first, it might keep you out of debt for the rest of the year. Tracking your spending will help you see more clearly where your money is going.
For more information on this and other financial topics, email me at charlestienharris77@gmail.com or write to me at P.O. Box 1825, Clarksdale, MS 38614.
Until next week – stay financially fit!
Charlestien Harris is our financial contributor, a retired financial coach with Southern Bancorp.
