“The Debt Trap” is a New York Times series well worth reading and/or watching.
Sadly, many of these stories feature an unexpected event that, coupled with overspending or poor planning, set off a downward spiral.
Let’s not pass judgment on the people profiled or people in similar situations. After all, Americans as a whole share many of their viewpoints and actions — including me at times.
So, I thought I’d try to put together a list of things to do before, during, and after finding yourself in a debt trap. What would you add or remove?
BEFORE GETTING IN DEBT
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Spend less than you earn by re-evaluating wants vs. needs
Keep current on all credit cards, never spending more than you can reasonably pay off in one month
Never use credit for short-term survival
Build an emergency fund
Insure your ability to earn a living with disability insurance
Insure everything else: car, home, your health
Be politically active and aware
WHILE IN DEBT
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Take all reasonable steps to eliminate and/or reduce debt — a popular strategy is Dave Ramsey’s “Debt Snowball”: rolling each debt down based on highest interest rate or lowest balance (whichever motivates you more)
Sell anything that you don’t use or need
Carefully remove as many costs as possible without sacrificing health, safety, or insurance
Find additional sources of income, even if by doing so it seems “beneath” you
Take a good look at your behavior and determine what needs to change
Be politically active and aware
AFTER DEBT
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Work to keep and improve your good financial habits
Realize you can help others from your experience
Monitor your behavior so you don’t slip into old patterns
Educate yourself on money management and make it a goal to get better
Surround yourself with people who will keep you focused on good financial behavior
Be politically active and aware
You can find people in all of these situations here at Geezeo. Join a group or discussion and know that you are not alone facing — and beating — a debt trap.
February 15th, 2010 at 6:22 am
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