How To Modify Your Spending

There are a number of steps the average homeowner or consumer can take in order to protect one’s credit and avoid financial difficulty. In general, there are a handful of simple steps to get out of debt and avoid it later once one has achieved a measure of financial stability.

While not exhaustive, we’ve provided the following simple tips as a means to help average consumers protect themselves in these difficult economic times.

The subprime mortgage market allowed a large number of people to qualify for loans on homes they could not really afford. If you have a variable rate, interest only rate, or so-called “teaser rate” mortgage, it may be in your best interests to switch to a fixed rate mortgage as soon as possible. Even if you lock in at a higher interest rate than your floating or variable rate now, in the long run, you’re better off: with a fixed rate, you aren’t susceptible to fluctuations that could result in a mortgage you can’t afford.

Credit cards thrive on consumer debt. In order to make money and create a debt treadmill, credit card companies offer low interest, promotional rates. After a single late or missed payment, the contract may indicate that the interest rate can go as high as 21.9%. Or, the contract may include a clause that says they can raise your interest rate if you fall behind on other lines of credit that you have – even if you remain current on your credit card. Alternatively, a credit card may offer low interest rates on balance transfers, creating a situation where you must now pay on new debt and old debt.

While the simple solution is to quit spending, if that’s not an option, cancel your old credit cards and request a new one with a lower credit line. If you remain current on your payment and are able to pay down your purchases every month, you can always call the credit card company in an emergency and request a one-time increase to cover unexpected costs.

Depending on how much debt you have, your only option for avoiding bankruptcy may be downsizing to a smaller home, car, or lifestyle. Before you buy something, ask yourself: Do I really need this? You might even want to consider putting off decisions about purchases for 24 hours, to give yourself time to think about it. Another simple way to curb expenses is to look for coupons and sales on items you definitely need, like groceries and office supplies. Using coupons in combination with purchasing sale items can easily save you hundreds of dollars a year.

We’re committed to helping individuals, businesses and families during the financial storm. While bankruptcy may be the only option left, our office can help you evaluate your options and determine the best means for regaining your financial footing.

To schedule a free consultation, contact Chang & Diamond, experienced San Diego Credit Repair Attorneys, today.