Out of Debt on a Budget: What to Do and What Not to Do
By Ramona Leach
As a single mom, my budget is pretty tight. I don't have a lot of money to spend and the money I do have usually goes toward essential bills and groceries. I, like most Americans, am in debt. I have credit cards to pay down and a car note that I simply cannot miss. And, I have a substantial sum left on my student loans although I haven’t finished school yet. I work two jobs and generally still only make enough to get by. Unfortunately, this story is not that uncommon these days. With the demand for well paying jobs exceeding the supply, even having a college degree isn’t enough to ensure your financial well being.
However, there are things you can do to make sure you aren’t getting in any deeper. Under no circumstances should you take out a payday loan. This is only spending money you haven’t earned yet, and with the risk of losing your job so high right now, its not a great idea to spend money you cant guarantee you will have next month. And payday loan companies will get their money back with interest one way or the other. If possible borrow from a friend or family. But stick to the general rule of 'if you cant buy it in cash, you cant afford it.' Also try to stay away from any low limit credit cards. They come with a super high interest rate and usually have fees attached so the small limit you do get is cut almost in half. Paying off debt with a credit card will temporarily relieve your problem but only create more headache in the long run.
Keep all of your accounts in good standing, but try to put a little extra toward your accounts with the highest interest rates first. Pay them off the quickest so your interest is not compounding. As long as your paying the minimum on all your accounts they will not bother you and it actually looks good on your credit. Paying a little extra on the accounts with the highest interest rates will pay them off the quickest. If you cannot pay any extra on your accounts at the moment that’s ok as long as your giving them something.
Lastly, do not ignore your creditors calling you. As tempting as it is to pretend the problem is not there, it will only get worse. You have a better chance at making comfortable payment arrangements with your original creditor than with any collection agency. Your creditors want their money as much as you want them to stop calling you. They are usually more than happy to make arrangements with you to pay off your debt as long as they see you are making an attempt. Ignoring them is not how you show them your trying!
Once your account goes into collections there is no getting out of it until your account is paid off. While collectors are somewhat flexible about making arrangements with you, they will not be very lenient and will compile interest and fees making your debt even more substantial. Getting out of debt on a tight budget is hard, but it can be done. It takes focus, motivation, and determination. Staying away from the ‘its only two dollars” mentality, and keeping your eye on the prize: being debt free!
