Self-Management

Negotiating with your creditors

The biggest mistake that people in financial distress make is in ignoring their creditors. Not answering the phone, throwing out mail unopened and just pretending the problem doesn't exist. This never solves anything and always makes the situation worse as the account is placed into collections by the lending company.

Calling your credit card companies and other lenders and agreeing to work with them is the first step in managing your credit well and avoiding further damage to your FICO score. As businesspeople, most lenders will agree to work with you to lower your payments, offer deferments, or take a payoff for a lower amount than what is owed rather than see you hang up the phone and pretend they don't exist. Let your creditors know the truth of your situation, when you can pay them and how much they will pay. You'd be surprised at how many of them are willing to negotiate and work with you to receive even some of the money they are owed.

Setting up a budget

Getting control of your finances begins with a budget, which is a written plan that lays out all of your income verses all of your necessary outgo. Setting up a budget is something that is best done by both you and your spouse if you have one, where you itemize all of your expenses – even the ones that don't have a name such as "fun money." If you are suffering from credit and debt issues, however, fun money is a luxury you can't really afford, as you should be putting any extra money beyond your utilities and household bills into paying down your debts.

Cutting Costs

An honest self-evaluation of your spending habits and budget once you've made one will probably reveal areas where you are spending money that you don't have to. Eating out too often rather than eating at home or packing a lunch, discretionary spending like movie rentals, smoking and alcohol purchases or paying too much for insurance coverage can lead to hundreds of dollars lost every year.

Cutting back on these spending items and applying the money instead to your debts can help you to eliminate them far more quickly and have a positive effect on your credit score as well. Please read our Frequently Asked Questions page if you have any inquiries.