CONTROLLING YOUR DEBT

Pretty much all the other considerations are personal or emotional. Are you comfortable with having the court establish your budget? Are you comfortable with the thought of having this mark against your credit history for ten years and being unable to get loans, credit cards, and so on? Do you lack the discipline to carry out a repayment plan without the threat of legal intervention? Are you willing to give up much of your property to creditors? Will you be able to recover emotionally from the process? This is a serious decision, so make it wisely as well the one of managing your bills in a better way.

The mind is an astonishing thing. It captures the ordinary patterns of your life in order to free you up to concentrate on new things. These captured patterns are called habits. Habits are like well-trodden pathways in your brain. Once those pathways are formed, it's hard for electrical impulses to go elsewhere. You've probably experienced this phenomenon. Can you remember a time you were driving somewhere and you made the wrong turn because you usually go that way? That's the result of one of these patterns, called an entrapment habit.

Some habits are necessary for survival, but most habits are neither necessary nor helpful. The more of these non-survival habits you can break, the better. Even breaking small habits helps. The best way to start breaking down little habits is to start with your routines at home. In the morning, as you get ready to start your day, do things in asS lightly diferent order than usual.

Put in a different earring frst, or put on a different shoe first. This exercise is not as easy as it sounds; you'll probably be surprised at how ingrained even these little habits are. Your behavior doesn't have to be completely different every day for this exercise to work. In fact, getting through the day would be diffcult if you tried to change everything at once. Just try to change one thing each day. Soon, you'll find that your thoughts are less confined. You'll probably fnd it easier to come up with new ideas or fnd solutions to problems that stumped you previously.

The flip side of breaking big habits more easily as you change the smaller ones is that if you don't change the smaller ones, the bigger ones are much more diffcult to change. The process is sort of like clearing out small rocks and branches so that you can reach the big boulder that is blocking your exit. As you get better at breaking the little habits, start thinking of the habits you have that involve money. These habits may range from not picking up change that falls on the ground.

If you think you are carrying too much debt, you probably are. If that is the case, then you know what an awful feeling owing much more than you can afford to pay can be. In the worst cases, it can lead to bankruptcy and ruin relationships. But, if you dedicate yourself to reducing your debt while managing to control the spending that led to your debt, you can get ahead.

To start gaining control of your debt you must first stop spending. Not all spending, of course, but any spending that you have not budgeted, or that really is not necessary, should be curtailed. This includes impulse items paid for by credit cards with bulging balances, paying for that extra round of drinks at happy hour, or dining out when you could just as easily have dinner at home.

You have slowed your spending to a reasonable pace. Now what? The next step that you should take toward controlling your debt is to pay off all of your high interest credit cards. Look at the list of bills . Highlight the bills with the highest interest rates and make paying off those completely your highest priority. One way to do this is to pay off the balance of your high interest rate card with one of your lower interest rate cards. On the following page is an example of how to handle outof-control debt.

To get a better handle on her debt, Molly should make paying off her Department Store Credit Card her top priority because it has the highest interest rate. She can do this by transferring the balance from that card to her Credit Card #1, which has a credit limit of $7,500, a balance of $3,256.76, and an interest rate of 9.9%—substantially lower than her Department Store Credit Card.

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