Avoid Bankruptcy by Keeping Your Debt under Control

 Posted on November 11, 2013 in Uncategorized

If you don't have money to “treat yourself,” then don’t, and while you’re at it, turn off your lights to save on electricity. It sounds simple, but sometimes unexpected expenses pop out and as much as you cut back, there never seems to be enough money to cover everything that you need. Sometimes bankruptcy is your only option. On average, an American household with at least one credit card has a credit card debt of almost $16,000.

CNN Money offers the following tips and tricks about debt and spending to help you avoid bankruptcy:

• Some debt is good: Taking out loans for big investments like houses and college is okay, but it is still important to only take out as much as you can pay back. Also be sure to compare interest rates before choosing a loaner.
• Some debts are bad: If you consume items quickly, do not use your credit card to pay for them; these items include food and vacations. If you cannot pay off expenses that continue to build up each month, you are likely to dig yourself into a hole too deep to easily crawl out of. Try setting money aside for these items prior to the expense, so when the time comes, you have the funds ready to pay your bill.
• Control your spending: Keep track of what you spend your money on each month so you can determine what to cut back on. Twenty dollars here and there adds up more quickly than you might think.
• Pay off debts with the highest rates first: If you have a higher interest rate on one debt than another, get rid of that debt first. You will be better off letting a lower-rate debt sit and collect interest than having a high-interest debt go unpaid.
• Avoid Minimums: Try to pay more than the minimum every time you pay your credit card bill, after a payment or two, you will just barely be covering the interest that is accumulating.
• Be cautious of where you borrow: Borrowing against your 401(k) or home may be convenient, but it could lead to losing your home or not reaching your retirement investment goals.
• Prepare for the unexpected: You never know when something will go wrong. Try to maintain a cushion of three to six months-worth of living expenses in an emergency fund. This can be used for medical procedures, broken appliances, or car repairs.
• Don’t rush paying your mortgage: If you have other debt, don’t put all your money into your mortgage payment. Usually mortgages have lower interest rates than other debts. You may also deduct the interest payments on the first $1 million of your mortgage loan.
• Do not wait to get help: If you cannot handle your debts, get help before you get in too deep.

Debt counselors can help or you can contact a San Antonio bankruptcy attorney for assistance. If you do not think you can pay your debts, attorney Chance M. McGhee can help you in Texas bankruptcy courts today.