Hi, I'm Julie Asti, I'm a certified financial planner with Asti Financial Management and today I'm going to talk about how to get out of debt. The first point that I would have on how to get out of debt, which sounds simple but really honestly, it all comes down to spending less, keeping your expenses lower than your income. As soon as your expenses begin to rise above your income, that's when people start to get into trouble. I know it sounds easier said than done but it really is an important point. If you do find yourself with debts that have accumulated, one of the things that you're going to really want to take a really hard look at, and it's hard, mentally, for people to grasp this and go with this, but really take a look at the amount of debt that you have and take a look at the amount of savings that you have and think seriously about using your savings to pay off your debt. I know people, sometimes, feel like they want to keep a stock pile, emergency savings, some liquid savings, but you have to look at your cash flow, and you have to look at your budget, and you have to look at the amount that you have sittings in savings, and the amount of your debt, and the amount that that debt is costing you. Not only on a monthly basis, in terms of your payment, but also in terms of the interest rate on the debt and the accrual because it continues to compound so the debt grows over time and if you're paying eleven percent in credit card debt, or even seven percent, a rate that may seem semi-reasonable and your savings is only earning two percent or three percent, it's going to be a much better use of your money to use your savings to pay down the debt. Save yourself the monthly payment and the goal for the future would be to use the amount that you were paying, to pay down the debt to then, replenish your savings, so that's one good strategy that you can use. One of the things that you really want to work towards, if you do find yourself in debt, is to set up a really solid budget. It does take some time and it does take some leg work but you really want to get down what your monthly income is, from all of your different sources, net, after taxes, to find out what you're actually bringing into the household. You want to look at all of your expenses, you want to make sure that you take into account, not only your fixed expenses, like rent, but also variable expenses and unforeseen, for example, the car breaking down. People don't budget for that and you really should because on an annual basis your car is going to need a tune-up or a repair so you want to try to budget in and put padding in for things that happen, gifts, Christmas, things like that, you want to make sure that you put a budget line item in for that. If you've done all of that and you still find that you're not able to keep up with your credit card payments or that you're not really making the dent that you would like to make in your credit card payments, what you want to do at that point is really, before it gets to collections, is to call the lender or the credit card company and just have a talk with them. Most credit card companies or lenders are going to want to work with consumers to either negotiate a payment, negotiate a payment schedule, they'll also work with you to renegotiate your rate down to something that might be more reasonable. My name is Julie Asti, a certified financial planner with Asti Financial Management and if you'd like to learn more about my company or my services, you can visit me on the web at www.astifinancial.com.
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