January 14,2009
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Borrowing Your Way Out of Disaster, Pt.2 –
– Plan A: Avoid CC debt. Plan B: Pace CC debt to be paid w/in months.How much reserve do you need? Three months is normally a good projection so, get out your calculator and decide how much you would need to survive that duration without going into debt with credit cards. Next, establish a budget now to start building that ‘first-aid kit' with ‘acorns' to avoid credit cards and have it intact as soon as possible. Disasters almost always come as surprises. So, expect to not have much warning and know that, what you've already done in advance is what you've got when the surprise hits. Credit cards are a last resort.
Embrace the three-second rule as fact. Statistics show that most bad car wrecks are the result of a ‘three-second distraction'. It's a fact. Any of those unfortunate victims whose lives have been ruined by financial devastation and who have been denied needed medical treatment due to a ‘three-second distraction' could be one of us. Bottom line, this may be all the warning you get. Prepare now. If the worst happens to you, expect all kinds of bill collectors to demand payment now. Knowing you don't have that much cash, they will put great pressure on you to pull out the old credit card. Don't give in. You know that those people could care less if you become buried in credit card debt.
If you absolutely must resort to credit cards then, pace yourself so that debt does not pile up. Offer the bill collectors $25 a month. They all prefer the $100 a month but, if you have more than one collector coming at you, divide up the number of payments going out. If there are more than four of them, see if you can offer each them $25 a month so you can still keep up with the payments. You don't want to accumulate debt you can't catch up with over a few months.