I heard recently of a person who was living paycheck to paycheck with payday loans keeping that precarious imbalance.  Furthermore at a past residence they were beginning to receive phone calls from creditors.  Actually, I’ve heard about this over and over.  Its not happening to just one person, seven out of ten Americans in a a recent survey were living from paycheck to paycheck.  I’m personally trying to distance myself from this approach to living as fast and efficiently as possible.  Here are some things to consider in the process for those who may be involved with such a problem:

1.  Reach for help from family and friends.  Yes, its humiliating, but you have got to get out of the cycle you’re in.  Find a place to stay that will reduce any rent/mortgage/utility bills.  Those are the essential bills and if you can reduce those its a great place to start.  Pride comes before the fall so don’t be proud and avoid the tumble.
2. Get a plan together to limit your expenditures outside of the food, clothing and shelter realm.  Figure it out and then execute it.  Figuring it out without action will just create continued failure.
3. Figure out how much you have coming in and then how much you have obligated yourself to pay out.  You need to know how much you have to pay off creditors in the next step.
4. Contact your creditors.  Be proactive - I know this sounds crazy, but if you don’t contact them and work out some sort of payment plan a lawyer may be contacting you.  Depending on the type of loans, debts and such you could be sued for your debts and have your wages garnished.  Given that your own choices got you into this mess its probably best to just figure out how to get out of it while cooperating with your creditors.  The plan mentioned above involving limited expenditures will free up money to pay off debts!
5. Learn from your experience.  If nothing else walk away from things having learned what not to do ever, ever, ever again.  Find your personal weaknesses - whatever they may be -  and start to evaluate why you’re weak there and learn things to grow and strengthen yourself in those areas.
6. Learn from others.  Ask others around you what they’ve done to fix their financial situations.  If you find others who are still financially broken - band together to learn more from folks you find who aren’t hosed financially :)  Communicate when you learn something new.  Often that communication about something new will help you remember it for the longer term.

The biggest thing I have learned while evaluating my own finances has been that I had to start somewhere.  If you find yourself in the straights wondering if you’ll make it you have to figure out where you are and then plan how to get out.  If the definition of insanity is doing the same thing over and over expecting different results then you have to break the cycle somewhere.  Sure, you may be living on beans and rice and used clothes under someone else’s roof for a bit but once you’re on your feet again financially you’ll be ready to charge forward with greater productivity and you’ll know not to ever take out a payday loan again.  Ever.

• No related posts.

This entry was posted on Saturday, August 18th, 2007 at 9:52 pm and is filed under Lesson Learned, Money Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.