Devise your own Credit Repair Plan
January 15th, 2009. Published under Mortgage. No Comments.
You found yourself in a very bad financial situation. You may feel emotional, hopeless, guilty or all of them. You are afraid of hitting rock bottom. Before that happens, you need to take the necessary steps to get your financial life in order. You need to look long and hard at your credit use and spending habits. It doesn’t mean a “debt consolidation,” program or a home equity loan .The word is PLAN.
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.
ALL of your financial obligations must be recorded in writing. This will be important for the money management part of the plan. All credit cards can be listed according to highest to lowest interest rate. Write down the minimum monthly payment on each card.
Figure out your disposable income. This is the amount of your salary that goes for necessities such as mortgage, car loans, credit card payments, utilities, other loan payments. When you subtract this amount from your salary, you will have your discretionary income. This is the income you can devote to reducing debt.
Next, decide which loans and credit cards you can pay down in the order you can do so. When tackling the first pay as much as you can, and pay minimum on the others. When number one is finished, apply that amount to the next and so on. This is “tough love” money management style and will be needed for quite awhile.
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.
Your current situation was not something that “happened “to you. You are responsible for creating it and you are responsible for repairing it. It wasn’t created overnight. It won’t be fixed overnight.