However, of these, the debt collector is the easiest to deal with.  Why?  Because you can tell him not to call again.  Yup, it’s that simple.  Oh, they can threaten all they want but unless they actually file a lawsuit, there’s not much they can do.  Most debt collectors aren’t willing to actually follow through on their threats, nor would they be able to actually support their claim in a courtroom.

Here’s another scenario.  Say they actually do file.  What should you do?  Here’s what you can do:  Show up.  This actually happened to a friend of mine.  He got a summons and he actually showed up.  The lawyer for the plaintiff had a bunch of cases she was running through and getting judgments for.  When they called my buddy’s case, she was shocked that he actually showed up.  She didn’t have ANY proof whatsoever that he owed them any money.

She asked for a continuance.  The judge asked my buddy if he was okay with that, (not sure of the actual legal terminology that was used), and he said, “No.  I’m had to take off work today to be here.”  Case dismissed.

Seriously, showing up is half the battle.  I’m not telling you this will always happen…but think about the volume of cases the plaintiff’s lawyer was dealing with and explain to me how was she really going to deal with a situation where the 1/100 actually showed up?  When you think about it, these lawyers don’t prepare for the 1, they prepare for the 99.

Anyway, moving on.  You don’t have to hang up on the debt collector, you simply tell them not to call you on that number.  Legally they can contact you in writing.  If they know you know they have to stop harassing you then they’re more likely to kick it down the road to the next guy.

This isn’t legal advice, by the way.  Don’t ever take my advice; double check it for yourself.  I just told you about one scenario that happened to a buddy of mine.  I’ve also told you what you can do to stop the collection calls.  But, do your own due diligence on the subject, (I’m not liable if they sue your pants off and win).

In fact, some items might do more than take up space. They can also deal with expensive maintenance or insurance costs. For example, a vehicle that you do not use very often might end up costing more money for you to handle than a smaller vehicle that is cheaper to maintain or insure and may be more appropriate for your driving needs.  Also, getting a mirrorball cleaned off can be a chore…so is trying to tell people why you have one.

Therefore, maybe you should consider getting some of that debt paid off by selling off a thing or two.  Do you know how much vintage mirrorballs go for on ebay?  You can have a garage sale and get rid of a lot of this stuff in a day.  It might not bring a lot of dough but do you think it’s really fair to deprive somebody of that thing you don’t need and they want so badly?  Okay, never mind on that.  Things are things and we have attachements to weird stuff; I get that.  Still, think it through.  Maybe you’ll be better off not having so much stuff anyway.  I digress.  Your debt is the issue.  Sell off some of that old junk and put it toward paying off your debt.

Anyway, that’s my advice on the subject.  The money that you get out of these items could be substantial.  This can help you to keep your debts under control.

To tell a story, this actually came up this year when I cleaned out my garage.  I found a some old autographs I’d packed away YEARS ago.  I ended up selling my collection for $600 to a local dealer.  $600!  That was sitting in my garage.  I had stopped collecting years ago and the thrill was gone.  Sure, I remenisced for a little while but after that I said, “who cares”, I’ll sell them to somebody who will love them again.   And I did.  I took that $600 and put it in savings…savings that I nearly immediately spent on a computer upgrade.

Computer upgrades are my thing, though.  Maybe your thing is paying off a boat-load of debt…that would be awesome.  Let me know what you found and what you did with that money, that would be cool, too.

There are some things about bankruptcy that you want to keep in mind.  Employers may look at your credit history to try and ascertain something about you.  If you require any sort of security clearance, they’ll probably run your credit.  If you want to make a big purchase that requires financing, they WILL run your credit.  That’s not to say that you will be declined or found deficient in any way, I’m just saying that’s a possibility.

Bankruptcy stays on your credit report 10 years.  I wouldn’t think so much in terms of what it will do to your credit; if this is something you’re seriously considering, that ship sailed a long time ago.  Look at bankruptcy as an absolute.  It’s when you throw your hands up and say, “ENOUGH!”

Think about what it means to declare bankruptcy:  You’re saying to the world, “I am out of money and assets to sell.”  It’s very serious and shouldn’t be taken lightly.  If you’re in this situation I’m sure you’re not taking it lightly.  I don’t envy anybody in this position.  The social stigma that stays with you…even if nobody else in the room knows you can still feel it.

Here’s the good news about bankruptcy: It’s almost a fresh start.  It will clear out the lingering unsecured debt, (or allow you to restructure it), and give you room to breathe.  It is, quite literally, a life saver to some people.  So, as bad as it is, it’s not all bad.  It’s a tool to help you get back on your feet.

If you can, try to stay above water and use one of the debt settlement methods mentioned elsewhere on this Web site.  Declaring bankruptcy is not the end.  Remember that.  It can be a season of life to struggle through.  Once you’re past it – it’s probably not going to seem as bad.

In fact, the stress that comes from dealing with seemingly insurmountable debt can be a challenge for anyone.  Debt causes stress and stress is a killer.  A simple algebraic calculation and we can then surmise that debt is a killer.

When your body is under stress, such as that of dealing with deadlines, debt the fight/flight response, cortisol is secreted into your blood stream.  Cortisol can give you a boost of energy, but when stress is from mountains of debt, what can you really do about it in that moment?  Unless your debt is chasing you with a hammer, (and yes, I see how it could), cortisol isn’t going to help you that much.

As a matter of fact, (especially with long-term stressers), you’ll likely experience impaired cognition, blood sugar imbalances, high blood pressure, increases in belly fat, and the list goes on.

Okay.  Now that we know just how messed up we are, let’s take a look at how we can actually do something about this stress problem.

When you feel yourself tightening up from stress, you need to take steps to relax yourself.  Simple excercises like deep breathing help you flood your body with much-needed oxygen.  If you’re not much of a heavy breather, you can listen to music, do some real exercise, or even some journaling.  There’s a lot you can do to help releive stress.  What do you normally do?  Okay, then do that.  As long as you’ve done what you can about your debt problem, (at least in the immediate), you have no choice but to try and relax.

You can lose your mind.  Lack of control of one’s own mind can be a big problem.  Not having a clear mind can cause you to do the opposite of what you should do…like throwing old tax documents in the freezer when everyone knows those go in the fire, (joking…don’t actually do that).  A more practical example is driving about ten minutes to the shopping mall only to realize you didn’t bring your wallet.  Yup, you can probably blame stress that for that one too.

Fortunately, you can ask for help with your debt and taxes.  You can get reach out to those who care about you and/or owe you money.  It also helps to contact your creditors to see if you can negotiate with them.  The more control you can take over the situation, the better you’ll feel overall.

If that doesn’t work then you need a massage or take on some yoga.  I know that the idea of relaxing for because you’re stressed about debt seems silly, but it really does work.  Relaxing is better than being stressed.  Goosfrabah!

Oh, don’t get me started.  If you have credit cards that have tacked on fees and interest penalties, get rid of them as fast as you can.  There’s another pseudo-scam the credit companies like to throw try.  It’s the “we’re going to send you a bill for a couple of months and then stop because it’s your responsibility to pay your bill whether we send you one or not” scam.  Personally, I’ve been hit with that one more than twice.

What were we talking about?  Oh, that’s right…the rate.  Interest rates are incredibly varied so it will help to pay off debts that relate to these rates.  You can use the debt snowball method, AKA “avalanche method” to help you melt your debt away.  I assume the person who created this method was a Colorado Avalanche fan or was stuck in a log cabin when coming up with the name. Still, it is useful.

I know I keep bringing this up, but the debt snowball is a great way to get out of debt.  First, you want to make sure you pay off your highest rate loans with the lowest balance first.  So, if you owe $400 on a 21% card and $1,500 on a 21% card, pay off the $400 card first.  Then use the money you would normally use to pay your $400 card and put it towards the $1500 card.  If you got some stragglers that can get paid off quicker even if they are a LITTLE lower interest, go ahead get those paid off first.  You can use that money to pay off the $1500 balance quicker.  I’m sure you can find a calculator online somewhere to figure out the cost analysis.

The goal is to focus on the most expensive debt first and then move on to the next debt in terms of interest rates.  You can then move on to the second highest rate debt once you finish getting the most expensive one handled, and so on.

This helps to keep your interest charges from getting too large while making sure that the most expensive debt is treated as soon as possible.

He said the process of working with that company was a little easier than a dealing with the credit directly.  It worked out for him, that’s good.  Be aware, though: not all companies are above board.  Make sure you check them out completely, regardless of what they tell you.

The debt managers reviewed his file and spoke with him about what he should look to pay off first.  They were a lot more organized that he was, (which isn’t that difficult, really).

They then didn’t quite advise him to stop paying his bills…but that’s what ended up happening.  The debt settlement company took over and started paying off his debts using the debt snowball method.  By the way, you can do this yourself without giving the debt settlement company a dime.  Of course he kept getting calls from his creditors until the debts started getting paid off.  Once the debt snowball starts, it doesn’t take long until they all get paid off, (usually).

The debt settlement company asked him to pay into a deposit account every month.  The idea is that this is your last step before bankruptcy court, so it’s a last-ditch-effort to get things under control.  When you have enough money in the account, the debt settlement company contacts the creditor they want to pay off and they make them an offer.  Once the offer is accepted, they will draw up the paper work and finalize the settlement with a payment; then that debt is gone and on to the next.  This process repeats until all your unsecured debt is paid off.

It is actually very beneficial if you’re the type of person that doesn’t really want to mess with a lot of paperwork, like my friend.  As long as you have regular income and can justify the hardship, a debt settlement plan will probably work.  Add up all your monthly income then subtract your expenses like food, rent, etc.  If the money you have left over is not enough to cover your debt service, you’re probably a good candidate for a debt settlement program.

You can actually get high rates controlled if you use a balance transfer. This will make your credit card expenses a little easier to work with.

First, you will have to contact a credit card provider and list information on your credit cards that you want to transfer to a new one. Unless you’ve got a card with Rolls-Royce you should not have a tough time paying it off. I’m sure that Rolls-Royce wouldn’t let you do things easily; they do charge thousand for hood ornaments.

You can then get the charges moved from your old cards to your new one. This new card will feature these old debts and in most cases should not have anything new added to them.

Zero percent interest might sound like a dream on a credit card but it is a reality for a balance transfer card. Balance transfers can give you 0% rates or rates that are substantially reduced. I wish every option would be 0% but 4% or 5% is still better than what you’re probably dealing with right now.

A balance transfer card, like M. Night Shamalamadingdong or that person who talked about her big fat Greek wedding, will start out great but will stop being great after a period of time. The rate on the card will go from its discounted rate to its standard rate after a certain amount of time goes by. This means that you will need to pay off what you have before the new rate comes in if you want to get the full benefit of this card.

You may want to see some of the things that deal with your card. You might get three to six months to pay off your debts with this card. Also, you may end up getting some annual fees to your card. A credit card company should provide you all the details on a card.

My example with this kind of card is something that helped me out big time. I had $10,000 in credit card debts over the last few years. I moved my debts to a new card with a reduced rate and got $8,000 pay off in six months. The $2,000 that I owed when the regular rate came in was easier to manage.

Switching to a new card is great to do because it helps you to get your debts paid off quickly. You can also get a flashy new card that might have a neat paint job or a fun hologram on it.

I admit to being a bit lazy when it comes to my free-time.  I like lying in bed after hitting the snooze button.  Some days I panic when I get up too late on workdays.  But, when it comes to debt, I’ve learned my lesson.  Late fees and interest charges are not conducive to a livable lifestyle.

They say that the early bird gets the worm.  I’ve never actually seen an early bird getting a worm but I understand the concept.  The same thing applies to debt.  Pay it off as early as you can so you have plenty of worms for later.  Perhaps it’s a strange analogy but it kind of fits.  The worm represents your cash flow.  If you pay off your credit card debt monthly then you are the early bird, not your credit card company.  So, you’ll get to keep your cash instead of your debt eating your worm…er…money.

How do you achieve this on a tight budget?

Simple, use the debt snowball method.  Get your debt under control by paying off the lowest balance card first.  Then use the money that you would normally use for that monthly payment to pay down the balance of the next lowest-balance card.  And so on.  The amount of money you’re paying off will snowball thereby allowing you to pay off more debt – faster.

If you can manage it, try to pay off your debt as you accrue it.  I use certain cards to accumulate points, as an example.  But, I make sure to pay them off immediately so as to avoid interest charges.  The credit card companies make the rules to this game so forgive me if I actually play to win.  If point accumulation is the name of the game then grocery shopping is an awesome way to win.  Don’t stop there, use your point-accumulating cards for gas and oil changes too.

I digress.  I think we were talking about managing debt, right?  Okay.  So using the snowball method to get rid of debt is probably the best way to eliminate your debt.  Also, you’ll probably want to try budgeting a little better to make even more room to pay off debt.

Get serious about your debt settlement and you can manage really start to build for your future.

You can’t get rid of debt through a game show or by getting an allowance from parents…I’ve tried that, “Well…20 years of back allowance comes out to…”  However, a budget will help you get debt under control.  The key to getting debt under control is reducing your expenses to a level that will allow you to pay down debt balances.

It’s not magic.  This might be a little ticky-tack, but it’s something.  Instead of buying Dr. Pepper, (if you have to), look for store variants like Dr. Cola, or Nurse Cola, or Dr. Sugary Prune Drink, or whatever.  I guess what I’m saying is, you can work within a budget as long as you stay away from impulse buys or the latest and greatest.  I’m looking forward to the launch of the new Blackberry tablet.  But, if I’m budget conscious, maybe I wait it out.  Maybe I don’t buy the newest gadget.  I mean, there are other things to consider.

Don’t think of a budget as something restrictive, think of it as a mechanism for freeing yourself for the future.  In fact, you could might learn some changes can be a little easier to handle than others. After all, maybe Dr. Soft Drink PhD might be just as good as Dr Pepper.

Look at your cable situation, for example.  You can get a Netflix account and stream content to your television through a device you buy for about as much as you pay for one month of cable.  You have effectively cut your cable bill completely.  That combined with your new shopping habits, you’ve saved about $150 right there.  If you have a satellite system…well, hopefully you’re not under contract.  If you are, find out what your payoff to get out of the contract is.  It might be worth it to ditch it completely.  I have gone and reduced the satellite television package that I used to have.

Look at where you can save by first analyzing your current expenses.  Here’s a short list to help you remember:

• Car payments
• Television bills
• Utility bills
• Expenses for groceries
• Mortgage payments
• Tax payments

Things like car payments and mortgages are pretty much set.  But, television, grocery, and utility bills are variable.

Until Regis is ready to launch “Who wants to be Debt Free?”, we’ll have to settle for managing our own debt.

When you look at the reasons home prices are falling, (we’re not talking about kids leaving their toys on their front lawns, or dogs doing their you-know-what on the front lawn), you discover that there’s not much that can be done about it.  It’s the economy…and what the economy has done to the jobs market.

Here’s the tumbling snowball:
1. Jobs got tighter
2. Home values stopped skyrocketing
3. The bad mortgages started to adjust
4. Home owners were unable to refinance primarily because of high loan-to-value
5. Home owners were unable to sell their homes because of high loan-to-value
6. Bank-owned inventories grew
7. The bottom completely fell out of the market
8. The above, (one through seven), just got worse and worse

This is a very simplified version of what happened, of course.  There’s a lot more that brought about this disaster but I don’t want to go into derivatives trading, and such.  That whole situation caused a near banking collapse because it always operated under the assumption the home values would always rise.

So, what can you do about your home value?  Not much.  It’s a buyers market and will likely stay that way for a couple years, at least.  I suppose you can hire people and help to turn the economy around but it’s going to take more than a few jobs to turn the country around.  Your only choice is to wait it out or sell your home for less than you want.  But, if you bought your home a couple years ago, you might have to wait a decade or so to sell at a profit.