It seems like a simple solution but for many people, it’s such an emotional one that they can’t see the forest for the trees.
Most people will agree that they have to find a way out of credit card debt and there are different ways to accomplish it. But that’s the easy part, if a thing like that can ever be called easy.
They know that they have to leave their credit cards home and put themselves on a very strict budget. And that’s certainly the first step. Most people also know how to get their credit card companies to offer them 0% financing for a year, and that is certainly a big help to know that they are paying down the principle and not accruing more interest charges.
But, here’s the biggest challenge and the one that tears people up emotionally. Most of these people are living beyond their income and they are too attached to their lifestyle to want to give up any part of it.
A large portion of their indebtedness comes from the homes they bought when times were good. When their income either ceases or takes a nosedive, they get frustrated with how much effort it now takes to make their mortgage payments and live the way they have always lived. It doesn’t occur to them that they have a more viable option that would get them on the road to financial recovery more swiftly.
I’m talking about selling their home for whatever the market will bear and either renting or buying a much less expensive home that they can afford with their newly reduced income. I’m also talking about having a huge garage sale for the items that will no longer be able to fit into a much smaller house.
For most people, this is an emotional crisis of epic proportion but it beats having to face foreclosure and bankruptcy. Once you’re out of debt and you have an income that allows you to sleep nights without having to worry that your utilities are going to be turned off for nonpayment, you can reassess your financial picture and make plans for your future that won’t put you into debt again.