If you've recently lost your job and are concerned about providing for yourself and your family, the normal rules of credit card spending don't apply. Instead of working diligently to pay down your debt, your focus should be on conserving as much cash as possible so that you're able to pay your basic living expenses, such as your mortgage and utilities. Contacting the National Foundation for Credit Counseling may ease your mind.
Conserving Your Cash: What Not to Do
There are several budget worksheets online that you can download for free. Make a list of your monthly expenses, putting credit card bills and other nonessentials at the bottom. If you have available funds to continue to pay your credit cards, only pay the minimum payments. Should you be unemployed for an extended period of time, you will need to preserve your cash to pay for things like a roof over your head, utilities and a car to get you to and from job interviews. Since credit cards are unsecured debt, the items you've purchased on your cards are yours to keep forever and in a bankruptcy proceeding, these debts are wiped out.
The National Foundation for Credit Counseling
The National Foundation for Credit Counseling is a nonprofit consumer organization that may be able to intercede with your creditors on your behalf. The NFCC is the nation's longest running agency devoted to credit education and every counselor is certified. Call the NFCC and arrange for a free one-hour consultation. The counselor will review your budget and can negotiate with your creditors to arrange for lowered interest and possibly smaller monthly payments. Your debts will be paid in full within five years.
However, there is a big caveat: be advised that your negotiated accounts will be closed and it will be difficult to obtain credit for the near future. You may wish to keep one card open in the event that you have an emergency for which you don't have enough cash.
Get-Out-of-Debt Grants
Be wary of ads promising debt salvation in the form of U.S. government grants: it's a scam. These organizations, no matter how legitimate-sounding, charge fees to provide grant application information and may even attempt to steal your identity. Be advised that government grant information and applications are free on the Web. There is never a fee to apply for a grant and the grant application will not ask for your Social Security number or bank account information. Remember: if it sounds too good to be true, it is.
Tips
If you're unemployed, no matter how much money you have set aside for a rainy day, remember that it's pouring and every dollar counts. Always pay your bills in order of importance, beginning with your housing payment. If possible, keep your credit card balances lower than 50 percent and always pay your bills on time. Utilize the NFCC: if necessary, their counselors will be able to refer you to legitimate housing and credit counseling programs, including bankruptcy solutions. Finally, keep your chin up, and remember: this too shall pass.
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