I have excessive balances on credit cards as well as a mortgage and car loan. What are my options?
Well, you have made the first step and that is acknowledging that you have a problem. The next challenge is to stop the cycle. If you have not already done so stop using the credit cards, cut them up if necessary. Watch out for the “Credit Counselors”. Often they are scams and get you in worse shape than you were to begin with. Contact your creditors. It is best to be proactive. Know what you can afford to pay and discuss a payment plan with them. There are two schools of thought when it comes to selecting which cards to pay off first. One is to pay the highest interest cards first to minimize the money you spend. This is best if you are disciplined and will see it through the long road. If you need more immediate gratification consider paying off your lowest balance and apply the extra money to the next card. You will see progress quickly with this method and my clients have had much more success getting out of debt with this method. Finally you need to address what got you in the mess. See what you can eliminate from your budget. I suggest starting with prioritizing with a 1, 2, or 3 all of your expenses with 1 being an essential expense and 3 being discretionary. Eliminate all 3’s and start working on the 2’s. Apply your extra income towards the debts. If you can get a second job do so and apply this money towards the debt. You can stop when this is paid off. This will accomplish two objectives the first is that you will minimize your budget and when you get out of debt you will be on much better footing and less likely to repeat your situation. Also know that you are not alone and you will get through this. Don’t make a second mistake and file for bankruptcy unless absolutely necessary. Best of Luck.