If it smells like Bankruptcy….

It’s a new year folks.  New resolutions, new gym memberships, more Nicorette patches being sold, more “me” time, etc.  While you’re resolving to do all of these things, please pay attention to your financial health.  Technically, I cannot ethically say  “Resolve to file for Bankruptcy”, and not just because that sounds like an informercial.  What I can tell you is to take a long and serious look at your financial situation and then decide what is best to do in your predicament.  

Heres is the financial resolution I would like you to follow:  Stop paying minimums on tens of thousands of dollars of credit card debt if you see no hope in sight.  What I mean by this is you’re earning about 35k a year and have over 30k in credit card debt at absurd interest rates, and you dont have any magical savings somewhere, chances are YOU ARE NEVER PAYING OFF THOSE CREDIT CARDS.  As harsh as that sounds, its the most likely conclusion.  Debt settlement companies want you to believe you can pay it off.  The credit card companies want you to think you can pay it off (while increasing your APR exponentially and charging you ever fee you’ve ever thought of in the process), you may even think you can pay it off if you just try hard enough…but you probably cant.

Here’s what bothers me about the above example even further:  Clients who use their retirement funds to pay for credit card debt.  Not only are you likely not going to have enough to pay off the debt, but you are literally jeopardizing your entire future to try and pay back an astronomical amount (after interest and fees).  Congratulations to you for paying off two of your ten credit cards that you owe large balances on, but please explain to me how you now plan to ever retire?  Again, this isn’t a ringing endorsement for careless spending.  I’m not suggesting its morally sound to purchase things and not pay for them.  What I am saying is that one needs to do a gut check and realize that mistakes were made, to address them in a reasonable manner, and then to move on and start your life fresh.  

If you’re looking at your monthly credit card bills and you see they’re growing each month, and you can barely afford to pay the minimums, and you’re not going to be cast as the lead in the new Batman movie, or starting your own hedge fund, you may want to look at other financial options on how to address that debt.  Everyone deserves a fresh start.