MOST people who are struggling with debt problems for the first time are often confused and don’t know what to do. They’ve never been in this situation before. They have always paid their bills on time. For the first time in their life, they are finding it difficult to fulfill their debt obligations. Bill collectors may be calling and they’re afraid to answer the phone or even go to their mailbox. They’re feeling embarrassed, desperate, or even angry.
This can happen to anyone. Sometimes, it is the result of making bad financial decisions. But more often than not, it is caused by reasons beyond your control. For instance, these days I am seeing a lot of small business owners who are simply not making enough to even meet their payroll needs. Every month is a struggle, and they are not even paying themselves because there is not enough money in the business after paying their employees, suppliers, vendors, and other business expenses. What should they do?
Or you can be someone whose work hours just got reduced or perhaps got laid off by your employer. I feel bad when I hear of people being terminated from their job of 10, 20 or sometimes even 30 years. The job is the only job they’ve had and known for years- and it is what they’ve considered to be their financial security. Then one day they get a notice from their boss saying that they are no longer needed by the company. They suddenly find themselves with no income and they are not prepared to deal with the fact that they may need to go back to school to learn new skills to find a new job or switch careers in midlife.
If you rely on a paycheck or your business to feed your family, missing even one paycheck or one slow month (if you’re in business) can be devastating. This is when people find out that with no savings in the bank, they are literally just one month away from bankruptcy because without the income, they are unable to pay their bills.
The ideal situation is to have a few months’ worth of living expenses tucked away in a savings account, but the truth is that most people don’t even have $1,000 in the bank. It’s true because as a bankruptcy attorney, I see it every single day. Even people who earn high incomes, most of the time, have no savings. They spend it all every month. It seems like the higher the income, the higher the expenses. It’s not how much you make that matters. It’s what you get to keep.
Once you fall behind on your debt obligations, it is easy to ignore the situation and hope that things will get better on their own. But that will never happen until you do something about it. That means you should be always aware how much money you have coming in, how much money you have going out, and spend within your means.
Borrowing when you are already in debt is not a good idea. I see a lot of people who resort to payday loans when their income is short, hoping this can be a quick fix. But they are not, and they will only put you in a bigger financial hole every month. When I see the interest rates that these payday loan “thieves” are charging, I get angry. Who in their right mind will pay more than 1000% interest on a $300-500 loan? You read that right: more than 1000% APR is what most of these pay day loan companies are charging and this should be a crime! But desperate people fall for it all the time and that’s what keeps them in business.
Don’t wait until you get to a point of desperation before you start tackling your debt problems. In some cases, you can still avoid bankruptcy if you know what your options are. If you wait until your situation becomes a financial emergency, you will find that those options are extremely limited..
* * *
The opinions, beliefs and viewpoints expressed by the author do not necessarily reflect the opinions, beliefs and viewpoints of Asian Journal, its management, editorial board and staff.
* * *
None of the information herein is intended to give legal advice for any specific situation. Atty. Ray J. Bulaon has successfully helped over 6,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-471-8272.
(Advertising Supplement)