Ask the Money Lady,

My New Year’s Resolution is to get my finances in order, but I have a lot of credit card debt and I don’t know what to do to get it under control.  Should I declare bankruptcy?  I am worried this will make things even worse, any ideas?

Julie XXXX (Drowning in Credit Cards)

Dear Drowning!

Don’t beat yourself up about this debt, it can be fixed.  Declaring bankruptcy should be viewed as a last resort and I would exhaust all other solutions before contemplating this option.  Yes, the bankruptcy will ruin your credit, however it is recoverable.  Once the bankruptcy has been settled and cleared, it is important to re-establish good credit right away.  This could take up to three years to do so but remember to reach for your dreams you must do the incremental steps over time to get there.  Money is not just for toys and possessions, it provides the means for you to reach your goals and ensures your comfort, dignity, security and independence as you age.  Be honest with yourself and be committed to change.  Let go of any past indiscretions or setbacks and start new this year.  It is a new decade, and a new start to clear your mind towards financial freedom.

If you are entering the year with considerable debt, there are a few other ways to fix this.  The easiest method is to consolidate high interest loans into a new mortgage to capture a lower rate and increase monthly cash flow.  This consolidation should be viewed as a one-time transaction to put you on the right road to a debt free lifestyle and should never be used as a continuous solution to get you out of future debts.  If this is not an option, make a list of all your debts and begin to tackle one liability at a time.  Pick the one you are going to concentrate on and put as much as you can down on this debt every month, whilst only paying the minimum payments on the other loans.  Once this debt is paid, then move to the next one, repeating the process of paying down one and maintaining the others with only minimum payments.  Once all the credit is paid, you can use these newfound funds to start a savings program toward investing.  This is when you will stop feeling helpless.  Be sure to avoid the tendency to sugar-coat your finances or make excuses to flee from finally resolving your debt this year.  It is necessary for you to take action and get out of the victim mentality, finally creating certainty and options for your future.  If this means finding ways to make more income, getting a new job, or cutting back on spending – then do it!

It is in the reach of every person to become financially comfortable.  Let go of your old habits and create new ones!
Let’s make this new decade your time to succeed.  Dream big.  Try new things. Save more.  Believe in yourself and most of all, believe you are worth it!
You’ve got this!

Good Luck and Best Wishes,
Money Lady

Written by Christine Ibbotson, Author of “How to Retire Debt Free and Wealthy”  Follow on Facebook & Instagram

Written by Christine Ibbotson, Author of “How to Retire Debt Free and Wealthy”  Follow on Facebook & Instagram

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