IF you are in debt, you’ve probably experienced firsthand how difficult it is to set aside even a couple of hundred dollars each month. You’re barely surviving on the income you’re making and after paying for basic living expenses such a your mortgage, rent, car payment, food, utilities and gas, your bank account is always negative. This is how a lot of people get into debt in the first place. To account for the shortage, they often borrow the money from credit cards or take out a personal loan hoping to "pay it back the following month".
If your liabilities exceed your income every month, the first thing you should do is to sit down and look at your expenses each month and know exactly where your money is going. Unfortunately, most people find that a big portion of their income goes to just paying debts each month. These debts are usually high-interest credit cards which could take forever to pay off especially if you are only making minimum payments each month.
Let’s say you earn a monthly salary of $3000. Before you keep any of this money for yourself, your employer deducts taxes for the government’s share. In most cases, this is almost a third of what you earn depending on your tax bracket. Thus, you are now left with 2/3 of the money you made. If you owe $30,000 in credit cards, for example, this could easily be another $1000 in minimum payments. So what are you left with after paying your debts? In most cases, you are left with only a third of what you just earned! And you haven’t even paid your mortgage or your rent, your car payment or your utilities! And what about money for food, clothing, gasoline and all other expenses?
My point is that if debt payments take such a huge chunk from your monthly paycheck, this is precisely why you never have enough money to pay for even basic necessities let alone save money for the rainy days. If your income is stretched out too thin every month, like a rubber band, you will snap one of these days and the consequences will be catastrophic. Did you know that without any savings whatsoever, any disruption or decrease in your income could be an instant disaster? What will happen to you and your family if you got laid off, got sick or disabled? If you are in this situation, what you need to do is to rethink your debt repayment strategy and reduce your debt load as soon as possible.
According to the Social Security Administration, if you took any 100 people at the start of their working careers and follow them for 40 years until they reach retirement age, here’s what you will find according to the Social Security Administration: only 1 will be wealthy; 4 will be financially secure; 5 will continue working, not because they want to but because they have to; 36 will be dead; and 54 will be dead broke- dependent on their meager Social Security checks, relatives, friends, even charity for a minimum standard of living. That’s 5% successful, 95% unsuccessful!
According to the above, the odds are already against you. In order to set yourself apart from the 95% and change the odds in your favor, what you need is a new way of thinking. Dare to go against the "crowd mentality"! Unfortunately, we are living at a time where people equate "wealth" with how much money they spend each month. Let me remind you that wealth is not what you spend but it’s what you keep from the income that you make.
If you are overextended on debt and would like to know what your legal options are, Congress has enacted bankruptcy laws that may help you get a fresh financial start. Bankruptcy, of course, is not a "one- size- fits- all" solution but where appropriate, it may be just what you need to change your life for the better.
For a free consultation, call Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos and West Covina.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
( Published December 2, 2009 in Asian Journal Los Angeles p. B2 )
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