: my moneyDear Deborah
Expert Financial Advice
I’m a 63-year-old single parent of an adult handicapped daughter. I have $15,000 in credit card debt, all on one card. We lived out of the country for ten years and recently returned to the States. I have not been able to find a job yet. I believe the debt is my responsibility but also know that if I do not find a job in a month I will not be able to make the monthly payments. Please comment on my best course of action. Thank you. –Diane
First of all, you’ll want to call your credit card issuer immediately and inform the bank you are unemployed and you need their help by reducing payments or lowering interest rates. Some creditors are willing to work with you when there’s a job loss. If you are a customer in good standing, you’ll have a better chance of having the credit card issuer work with you.
Be aware that if you stop making monthly payments on your credit card, there are long term effects. Your credit is ruined and your account will be sent to collections. And even though you may be more financially stable down the road, it will be harder to borrow.
A Bank of America representative recently made this statement concerning credit cards:
“Our objective is to work with our customers who are facing financial difficulty and we have accelerated our efforts to reach out to customers earlier in the delinquency cycle before their financial situation becomes too distressed. We offer a number of tools to assist customers such as waiving or ceasing fees and reducing interest in connection with monthly payment programs. We also work with more than 400 non-profit credit counseling agencies that counsel, educate, and develop restructured payment plans for customers who are experiencing financial stress.”
Another option is to transfer your balance to a card with lower introductory rates. Consider applying through credit unions or smaller banks, which are usually more customer-friendly and have lower rates. (But if your debt ratio is too high, you won’t be a qualified borrower). An excellent resource to research credit cards is www.bankrate.com.
If applying, carefully read the quagmire of fine print of the credit card agreement, disclosing its rates and terms. Typically when creditors pay late, the universal default clauses kick in, raising interest rates. Note: Banks have lowered credit limits, and fewer applicants are being approved, due to excessive consumer borrowing and defaults.
Second, get serious about cutting your expenses and living below your means. Stop adding to your credit card debt. Kicking revolving debt down the road is not a solution. It only grows and grows. Look over the last six months of your bank statements to identify the “needs” versus “wants” purchases and where you need to cut back on unnecessary spending. What expenses will you cut so you can make your credit card payment?
What monthly expenses can you lower or eliminate? Look at these areas: landline or cell phone, transportation (gas, a large car payment), and entertainment (eating out). Concerning utilities, what about lowering the thermostat several degrees? Check with your utility company as to whether it has a hardship fund or whether you can be placed on a budget plan. Grocery bills can be cut in half. Have you reached out to your community or church for temporary help?
If your monthly outgo has been bigger than your income for awhile, and you feel you’re in the financial danger zone, meet with a credit counselor. Search for a non-profit credit counseling agency registered with National Foundation for Credit Counseling (NFCC) in your area. It has nearly 850 locations nationwide. Find out more at www.nfcc.org.
Third, make looking for a job a job in itself. Tony Beshara, placement and recruitment specialist, says to call every person you know and every contact you have. Don’t confine yourself to searching online on Internet job boards. According to Tony Beshara, usually 2-5% of people get jobs through the Internet.
Develop a system for your job search by tracking calls, interviews, and follow-ups on the interviews. Call potential employers and tell them what you are qualified to do for them. Be prepared to talk to many people and make a quick and to-the-point presentation of yourself.
Beshara advises people to “do whatever it takes to earn money now” even if it means working in another area while waiting for a better job. He says not to wait for the perfect job, but to find another job as quickly as possible.
Deborah Nayrocker writes on personal money management topics,
showing others how to take control of their financial future. An
award-winning writer, she is a guest contributor with www.CBN.com and a finance columnist with www.Crosswalk.com. Deborah is the author of
The Art of Debt-Free Living and a Bible study Living a Balanced
Financial Life. Her website is www.artofdebt-freeliving.com.