You Can Implement your own Credit Repair
One day you realize that you are in a serious personal financial disaster situation. If you want to avoid a situation that is so out of control there is no way out, you need to make the effort and take the time to get your money management and credit use habits back on track. You don’t need to rush into “debt consolidation” or “home equity loan.” You can work out a strategic repair plan for yourself.
First of all, you are going to need to collect all your credit reports, credit card and bill payment records, mortgage and loan information. It is likely that some of your repair activities will be going on simultaneously. Debt worksheets are available online to help you.
Make sure your credit reports are accurate. This may involve some written communications with one or the other of the three major credit bureaus. Be persistent.
Put in writing all of your financial obligations. You will be particularly concerned with credit cards and perhaps small loans. List the cards with highest to lowest interest rates in order, and the minimum payment for each card.
After this, you are going to look at the picture of “disposable income” and “discretionary income.” What are these? You have a certain amount of your salary that pays for your necessary expenses such as loans, utilities, mortgages, insurances, and credit cards. This is disposable income. Subtract the total from salary and this is discretionary income which is the amount you have to assign to reducing debt.
Determine which credit cards and loans you can pay down in order. For the first on the list, pay as much over minimum as possible. Pay minimum on the others. When the first is completed, apply that payment to the next in line and so on. This will be an ongoing money management strategy for a long time.
There will be some personal discomfort as you tackle this project. There will need to be changes in your lifestyle. You will need to cease purchasing that is not essential. You will need to stop charging, pay bills on time, minimize travel and entertainment, dine more at home and perhaps give up other indulgences.
This situation didn’t happen overnight and it won’t improve overnight. Is it worth it? This is your financial life. You are the one who has to save it.
