It has taken me days and years to come to this conclusion and I am pretty exited to share it. I have certainly met with hundreds of people to talk about bankruptcy and debt settlement clients. At the beginning of each meeting I typically introduce myself and ask what has brought them in to meet with me so that I am able to get an idea of what is going on in their lives before we dive into the numbers.....but we always do dive into the numbers. What I tell the people I meet with at Halcomb Singler that I need them to know prior to meeting with me are the following: 1) net household income, 2) household expenses, 3) debt and 4) value of assets.
Please keep in mind that people who are struggling with their debts typically don't seek advice from me until they have attempted to pay down their debts on their own. By the time people meet with me they have typically sat down and calculated their income and expenses. It is also normal that they have cut out any extras such as cable or a home phone and aren't budgeting for much in the way of entertainment. It is also typical that they are not budgeting for car repairs or clothing. They are intensely focused on paying only for their bare necessities and putting every other extra dollar toward paying down debt. Most of you are probably reading this wondering what else a person could do and wondering what on earth I am going to say is wrong about trying to pay down your debt as aggressively as you can.
Well, there is nothing wrong with attempting to pay down debt aggressively. However, I still think in order to be successful in paying down debt that you must budget for things like clothing, car repairs and entertainment. True, this lessens the amount of money you have to pay down debt. But is it realistic that you are going to be able to go ten, eleven, twelve, etc., months without buying any clothing or renting a movie?? Maybe....if you have more discipline than most. However, in my opinion setting a budget with no wiggle room for anything other than the bare necessities so that every extra penny goes to paying off debt is akin to going on a fad diet....at the end of the diet you are going to gorge yourself on every bad food in sight and gain back all the weight you lost plus some. What I am saying is that you deprive yourself of renting a movie, buying a pair of inexpensive shoes, taking your family out to eat long enough (especially if you had been in the habit of doing all of these things prior to going on the bare minimum budget) that every once in a while you are going to completely fall off the wagon and go on a buying spree.
Would it work better for you to set a minimal entertainment, clothing, or eating out budget if you could stay on track? Are you the type of person who can maintain financial discipline for a small amount of time? I am not saying that there is no merit to paying as much money towards debt each month. But to me it makes sense to have a little set aside for entertainment, clothing and don't forget how important it is to set aside some money for an emergency fund prior to going on your debt crusade.
I would love to see some comments about which of these tactics for paying down debt have worked.....or any others that I haven't discussed.
If you are considering bankruptcy and live in Indianapolis, Carmel, Noblesville, Fishers, Zionsville, Tipton, Kokomo, Anderson or any of the surrounding areas feel free to contact me. Halcomb Singler offers a free initial consultation for those considering bankruptcy. At Halcomb Singler we try to focus on finding solutions to debt instead of judging or placing blame on how debt was accumulated. We do not pressure clients to file bankruptcy, but will answer any questions you have regarding bankruptcy or debt settlement.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
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