Down to my last dollar!

I’ve worked out why I’m down to my last dollar each month. It’s not because I don’t earn enough. It’s not because I spend too much (though that has something to do with it). It’s because I’ve allowed my money to be in control. I don’t mean that it’s whispering from my wallet “Spend me, spend me now!” (Though I understand that this might be the case for some people), more that the way I spend it, or have spent it in the past, controls what I do with my life in a far bigger way than it should. Building up debt from loans, overdrafts and credit cards, and then repaying it too slowly and gathering up interest, fees and penalties and then building it up again means that a significant percentage of my monthly income is deducted to pay for borrowing - debt that will roll on, growing like a snowball, until I take control. I resent the monthly deduction. It means that I am never able to enjoy the full benefits of my salary. I now recognise that it is actually a ‘Stupidity Tax’ levied on me through my own actions. The big difference between Stupidity Tax and regular state, federal and other taxes imposed by government, is that you can actually do something about it. In a previous post, I outlined my plan for finally tackling the credit cards. In the case of the loans, it appears to be a simple question of biting my lip and waiting until they are paid (24 more months) and then saying “No more!”. Assuming that I will have paid off my cards around the same time, I need to remind myself that I will effectively be awarding myself a pay rise of around 30% in October 2008. Of course, I will still be paying my other bills - rent, school, utilities, and cable and so on, but I don’t mind that. I choose to spend my money on those to give my family and me the quality of life with which we are comfortable. From now on I’m taking control. I’m my money is going to work for me. I’m just saying ‘NO!’ to the Stupidity Tax.

Many, maybe most people you know, are in debt. Your workmates, your family, the person sitting next to you on the train. In many cases it’s debt they think they can handle - mortgages, short-term loans. However, in just as many - maybe more - cases, it’s debt that’s killing them inside. And they’re scared.

If you’re worried about your debts:

1. Don’t take out a consolidation loan to pay for them all. Even from a reputable financial institution. Despite what the ads say, it will end up more expensive in the end and, after all, you will still be in debt.

2. Don’t ignore the problem and hope it will go away. It won’t. The law of compound interest works both ways. It can make your savings and your debt grow. Because the interest on borrowing is higher than the interest on saving, the debt grows quicker.

3. Don’t join up with a scheme that promises to help pay your debts on your behalf for a significant fee.

4. Do follow this free advice NOW:

If you don’t think you can manage to clear your level of debt on your own (if the collection letters have already started coming in, or your credit card statements are red, this is definitively you - if they haven’t, but you know they will, then this is also you), then contact one of these organisations today:

If you are in the UK, contact the CCCS (Consumer Credit Counselling Service) here or call them on 0800 138 1111. The CCCS is a registered charity who will act as a ‘middle man’ with your creditors (the people or organisations who you owe money to). You will need to fill in some forms giving details of your earnings (however small they are), your outgoings (how much you need to live on) and your borrowings (what you owe). The CCCS will contact your creditors and negotiate a favourable payment schedule with them, based on your ability to pay. You will then pay an agreed regular sum to the CCCS who will in turn pay your creditors. Your creditors will be more prepared to negotiate with CCCS than with you directly, because they know - it’s true, let’s face it - that the CCCS are more likely to keep their promises to pay them, even if it takes longer.

By the way, CCCS will only pass on payments to your creditors when you have passed the payments to CCS, as agreed - they will not act as your bank!

The CCCS service is FREE. Other organisations will charge you for this service. They may well be reputable companies, but why pay to pay off your debts when you don’t have to.

If you are in the US, contact the NFCC here. The NFCC are the organisation that represents the most reputable debt help companies in the US. They will recommend a company suitable for you. Most of these US companies either will ask for a voluntary payment only for their services, or will charge you a small fee. Before you ’sign up’ with any of the companies they recommend, though, look here.

I can speak personally for CCCS. They are a ‘lifesaver’. Always ready to listen, comment constructively, and help. The NFCC have a good reputation too, though I can’t speak for them from personal experience. In the US, look here too.

If you are not in the US or the UK, there will be similar organisations in your own country. If you need help identifying a free one, contact us at admin@downtomylastdollar.com or leave a comment on this site and we will do our best to locate one.

On final piece of advice – please act now. Not today – now. As soon as you start speaking to these organisations, the world will seem a brighter place. Guaranteed.

You are not alone.