Finances are out of control, acknowledgement is the first step to get out debt!

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Facing up to Reality with Debts ??First Steps
3 years ago
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Ok, so you're admitting you're in over your head. Believe it or not, this is good! Not that you have all this debt, but because you've taken your head out of the sand and acknowledged that your finances are out of control. Acknowledgement is the first step and you've done it. Well done!

So now we're done cheering your facing up to reality, what do you need to do next? Well the first step I'd suggest is that you get a notebook, pen and calculator and all the outstanding bills you have. Prepare to make a couple of very intense lists that are going to open every financial drawer you possess. Are you ready?

Draw two lines down your page dividing it into three columns. Down one side write every single financial outgoing amount that you have, in the middle column make a note of whether that is a living expense (i.e. rent, utilities, etc), and in the end column put what the monthly figure is. At the same time you are doing this exercise, I want you to start another sheet of paper which has two columns on it. Here you only want to make a note of the real debts ??i.e. credit cards, car payments etc. It might be a good idea to check your credit report, to make sure there are no outstanding debts you are not aware of. In the first column make a note of what the debt is, and then in the second column put a total amount outstanding figure, NOT the monthly figure (that goes on the first sheet of paper), but the amount of money still owing on that item. When you are finished, and you're absolutely sure that you don't owe anyone else any money, and there are no payments not listed on either sheet, total up the two columns of figures. Take a deep breath. This is step two, otherwise known as facing up to reality in its starkest form! Unless you take on any more debts, this is as bad financially as it's going to get and so from here everything is walking into the right direction back to financial health.

Take another sheet of paper. This time, draw a line across the centre. In the space above the line, draw three lines down to the centre line making 3 columns. In the first column make a note of all income you get from any source whether salary, pension, welfare, annuity etc. In the middle column make a note of whether that's weekly or monthly, and in the end column put a monthly value for each item (so if you have some form of weekly payment coming in, multiply that by 52 and then divide the total by 12 to get the monthly amount). In the second half of the page put one line down dividing the section into two columns. In the first column make a note of anywhere you have money invested ??stocks and shares, 401K, annuity, trust fund, anything at all of that nature where there is money locked away. Then in the second column place a value of what that is worth at its current present day value if you were to cash it in. Total up both of these columns. Now you know the state of play with the plus side of your finances ??and that's step 3 complete.

The last of the first steps towards facing up to your debts is probably the hardest. You've already had to admit to yourself that you're in a financial mess, but the time has come to seek professional advice. Make an appointment with either your bank manager, or if you don't think they will deal sympathetically with you, with an independent financial adviser who specializes in situations such as yours. On the appointment day, tell yourself that this is the first day of my journey towards good financial health, and I will put aside all embarrassment and shame that I feel in order to start that journey on the right foot. Take the three summary sheets you compiled as steps 2 and 3 of this article, plus any documentation you have regarding individual loans, and income. Be completely honest about your finances to the person you meet. They are trained to do their job, but they can only do that if you put your trust in them.

It's a long journey you're about to take, but I'm sure that with appropriate guidance, and taking the advice of the professionals trying to help you, that you'll get through this difficult time and will see a better financial future ahead.
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