DavidRM
11-13-2004, 03:26 PM
...or How to Shoot Your Credit Rating Dead Dead Dead while You and Your Family Still Eat
OK. So you quit your job. Or it quit you. Or sales plummeted. Or whatever.
You review the money that's come in, you compare it to what has to go out, and not only is there not enough...but that ain't nowhere *near* enough. And your credit cards are full and/or unavailable.
So what do you do?
The answer is simple, and will sound familiar to anyone who has ever read a how-to-get-rich book: You pay yourself first.
If you're like most Americans, you treasure your credit rating and don't ever want to see it hurt or even under stress. So you automatically assume you should pay your bills first and try to live off what is left. Fact is, though, credit ratings can be regained, but death from exposure and starvation is quite permanent.
There's nothing like the sudden onset of poverty (even temporary poverty) to re-align your priorities.
1. You figure out the absolute minimum you need to feed you and yours for the next week, 2 weeks, or month, until the next influx of cash. Think cheap. Damn cheap. (Oddly enough, you might find you're eating *more* healthy rather than less because you're buying a lot fewer prepared foods and more raw vegetables and fresh meats and so on.)
2. You take out that much in cash, and set it aside. You are now buying groceries with cash. Use your calculator in the store and try to get the greatest number of "eating days" out of every dollar.
3. Figure out what you can get rid of/postpone immediately:
Cable/satellite TV/pay channels: gone.
Eating out: a thing of the past. Learn to cook.
New clothes: they can wait.
Consumer items (movies, books, music): learn to enjoy what you have.
Etc.
Note that there are some things you can't get rid of, like Internet access (though maybe you can reduce the price some by shedding excess features) or anything else you have to have in order to make money.
4. Then you pay your bills in this order:
Your mortgage/rent. While your credit rating may be dented by the rest of what I'm going to say, if you don't keep up on your mortgage you will probably kill it. Also, if you lose the roof over your head...well...don't do that.
Your utilities. At least half to everyone. Find out which ones have the most leeway and string them along while you keep the rest of them from turning you off.
Credit cards. Well...by now you're probably scraping the bottom of the barrel, but try to send 'em all *something*. And be prepared to explain exactly what you're doing when they call you. And they will damn well call you. Count on it.
Credit card companies are the easiest ones to shortchange, because all they can do is call you and be annoying. They can't take anything away, at least not immediately. (Unless you rolled your credit cards into a second mortgage, in which case your house is at risk. Oops.) On the Odd But True side of things, all credit card companies have programs to help people who fall behind get caught up again--but you usually can't get into that program until you fall behind. And then you have to put up some ridiculous sum of money, which you probably don't have or you would've paid them anyway. Go figure.
5. Review what you have that can be sold for ready cash. The "exchange rate" of DVDs/CDs/books for cash is pretty weak, but as a last resort...hey...you do what you gotta.
6. Find any and all ways you *can* make money, and forget everything else for a while and focus on those.
That's enough, I guess. You should have the general idea by now.
This situation sucks, I assure you. But it can be survived. And you can come out better than you went in.
OK. So you quit your job. Or it quit you. Or sales plummeted. Or whatever.
You review the money that's come in, you compare it to what has to go out, and not only is there not enough...but that ain't nowhere *near* enough. And your credit cards are full and/or unavailable.
So what do you do?
The answer is simple, and will sound familiar to anyone who has ever read a how-to-get-rich book: You pay yourself first.
If you're like most Americans, you treasure your credit rating and don't ever want to see it hurt or even under stress. So you automatically assume you should pay your bills first and try to live off what is left. Fact is, though, credit ratings can be regained, but death from exposure and starvation is quite permanent.
There's nothing like the sudden onset of poverty (even temporary poverty) to re-align your priorities.
1. You figure out the absolute minimum you need to feed you and yours for the next week, 2 weeks, or month, until the next influx of cash. Think cheap. Damn cheap. (Oddly enough, you might find you're eating *more* healthy rather than less because you're buying a lot fewer prepared foods and more raw vegetables and fresh meats and so on.)
2. You take out that much in cash, and set it aside. You are now buying groceries with cash. Use your calculator in the store and try to get the greatest number of "eating days" out of every dollar.
3. Figure out what you can get rid of/postpone immediately:
Cable/satellite TV/pay channels: gone.
Eating out: a thing of the past. Learn to cook.
New clothes: they can wait.
Consumer items (movies, books, music): learn to enjoy what you have.
Etc.
Note that there are some things you can't get rid of, like Internet access (though maybe you can reduce the price some by shedding excess features) or anything else you have to have in order to make money.
4. Then you pay your bills in this order:
Your mortgage/rent. While your credit rating may be dented by the rest of what I'm going to say, if you don't keep up on your mortgage you will probably kill it. Also, if you lose the roof over your head...well...don't do that.
Your utilities. At least half to everyone. Find out which ones have the most leeway and string them along while you keep the rest of them from turning you off.
Credit cards. Well...by now you're probably scraping the bottom of the barrel, but try to send 'em all *something*. And be prepared to explain exactly what you're doing when they call you. And they will damn well call you. Count on it.
Credit card companies are the easiest ones to shortchange, because all they can do is call you and be annoying. They can't take anything away, at least not immediately. (Unless you rolled your credit cards into a second mortgage, in which case your house is at risk. Oops.) On the Odd But True side of things, all credit card companies have programs to help people who fall behind get caught up again--but you usually can't get into that program until you fall behind. And then you have to put up some ridiculous sum of money, which you probably don't have or you would've paid them anyway. Go figure.
5. Review what you have that can be sold for ready cash. The "exchange rate" of DVDs/CDs/books for cash is pretty weak, but as a last resort...hey...you do what you gotta.
6. Find any and all ways you *can* make money, and forget everything else for a while and focus on those.
That's enough, I guess. You should have the general idea by now.
This situation sucks, I assure you. But it can be survived. And you can come out better than you went in.