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Answers About Debt, Collection Agencies, and More

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This week, your credit questions are answered.

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As promised, I'm answering questions today that I've received over the past few weeks while writing about this particular chapter in my journey.

Q: What was the accumulated total of all your credit card debt? Basically, you took your combined balances from what number to 0 in what amount of time?

A: Well, nothing like cutting right to the heart of the matter, huh?

The amount of unsecured debt I'm dealing with (since you asked) is in the range of $50,000 to $60,000. My combined balances are not "0", but I will let you know when they are. The goal is a year to pay off the unsecured debt, but it may take longer. We'll have to see what happens.

In the meantime, here are some points I consider to be more relevant than the actual amount of the balance:

1. Regardless of the amount of debt you have, if you're in over your head and can't make headway even when you're making on-time payments, you have a problem. Whether the amount is $5,000 or $500,000 is irrelevant.

2. It's important to take a big problem and break it down into manageable pieces. While $60,000 sounds like a big number (and it is for many people), for The Donald, it would be nothing to look at twice. What matters is how much you can put toward it every month.

3. There are no "quick fixes". I didn't get into this mess overnight, and I'm not going to get out of it overnight either (neither will you). The key is learning how to keep from getting back into trouble again once the balances have been paid.

Q: How much is your debt service costing you every month?

A: This is a great question because it addresses cash flow, which is critical to long-term survival of the debt problem itself. My debt service is about $1,500 per month (on top of my regular living expenses plus business expenses). The good news is that once I'm done paying the debt, I can redirect that money toward savings, and build up my emergency fund again.

Q: Can you please address the resources available for people who don't have the resources to consult with paid experts?

A: I think paying for professional help is one of the best places a person "who doesn't have resources" can put some of the resources they do have. After all, it's very likely that you got yourself into this situation because you were trying to make decisions in an area that you weren't qualified. I knew I was in over my head, and that's why I turned to my advisers for help. Plus, I was way too close to it and didn't have any kind of perspective about the problem or what some realistic solutions were.

Not all advisers require a big up-front fee. Some will help you with cash flow strategies if they're getting paid for managing some other asset, like a retirement account. Or they may set up a payment plan.
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