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Oscar Dominguez: Make your debt manageable in 2009

Union Bank

Posted: March 18, 2009 7:27 p.m.
Updated: March 18, 2009 7:16 p.m.
 
As it becomes more difficult for consumers to manage debt amid job losses and the downturn in the housing and financial markets, more and more Santa Clarita Valley residents may find themselves examining their finances in 2009.

With the average national bankcard borrower debt at more than $5,700 in the third quarter of 2008, according to TransUnion.com, the first step consumers can take to help ease the burden of amassing debt is to create a budget and determine exactly where money is going each month. This can be accomplished by deducting expenses from income. Then, create a budget making your high-interest rate debts the priority.

The goal is to erase as much debt as you can, as fast as you are able.

If your budget doesn't include enough money at the end of the month to at least cover your minimum payments, consider cutting out extras - eating out, going to the movies, taking trips - and perhaps boosting your income by working extra hours or even getting a part-time job to make ends meet. Now might also be a good time to turn a creative skill or hobby into a side job.

Consider these additional tips to help manage debt:

n Be proactive and make the call. Whether you're having trouble reducing credit card, mortgage, or any other type of debt, consider contacting your credit card issuer or lender to discuss negotiating your interest rates and terms. Your call displays a good faith effort to control your debt.

For mortgage debt, lenders may consider giving you some leeway and work with you so they can at least recoup a portion of the money owed to help avoid larger losses as mortgage delinquencies rise.

n Look into a home equity loan. A home equity loan usually carries a relatively low interest rate and is a convenient way to obtain cash to help combat debt. If you choose this option, try not to lose sight of your primary purpose for taking out the loan: to pay down debt and get back on track.

n Contact a nonprofit consumer credit counseling agency. If you're unable to re-negotiate the terms of your loans and are struggling to pay the minimum balances on your credit cards and bills, you may want to consider contacting an organization affiliated with the National Foundation for Credit Counseling, a national nonprofit network.

The sooner you can wipe away past debt, the sooner you can concentrate more of your efforts on savings for your future.

Oscar Dominguez is vice president and branch manager of the Stevenson Ranch branch of Union Bank and the Valencia Bank & Trust branch. His column reflects his own views and not necessarily those of The Signal.

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