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I Have Big Debt. I am From Guatemala. – Rebeca

Rebeca

“Dear Steve,

I have big dept. I am from Guatemala. I make 9k a month and my husband has a small bussines which makes in profit around 1k. Im trying to cut all my expenses as low as possible. I have debt in credit cards as of today for 47k I am paying a little bit more than the minimum on each one and trying not to use it the big problem is that in paying all the expenses I ran out of cash and need to use them.

I have no savings. I pay cash power, water, cable, gas, internet, cell phones and phone service.

Which should be my plan?

Rebeca”

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The Answer

 

Dear Rebeca,

Your situation is a classic example of my current point of view, that I have been criticized for, that if people don’t have an emergency fund of cash they should only pay the minimum payments on their debts and put the rest of the cash in a savings account.

A savings account for you is critical so you can avoid having to fall back on the credit cards in unusual times.

Overcoming this problem is dependent on a number of factors. While you seem to have a decent monthly income, I don’t know what part of the country you live in and some are much more expensive than others.

I’d start with paying very close attention to your expenses and see what you can trim. Then I would track your spending to find out exactly where your money is going. Guessing to make a budget is not effective. We need real and accurate data to create a factual spending plan for you to use.

Download my free e-book, Eliminate Your Debt Like a Pro and starting on page 81 are the steps necessary to create a spending plan for you that will work.

Once you begin to save, you can begin to dig your way out of this debt using the debt snowball approach. You should start with the smaller debts first and as bills are paid off you can then use the money that would have been used for those bills and apply it to remaining bills.

Your debt reduction will begin slowly at first but will pick up speed. Trust me, this will work for you, but only as long as you stop falling back on credit to help make ends meet month-to-month. Every time you go back and put more debt on the credit cards you erode the progress that you made.

I’d suggest that you also see if you can’t help your husband brainstorm how to increase his business or make it more profitable. I’m confident there is additional income opportunity for your family there as well.

Big Hug!

I Have Big Debt. I am From Guatemala.   Rebeca
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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