Over the last few years we’ve seen the worse economy for some since the great depression. African American’s have been hit the hardest with estimates of 15% – 30% black male unemployment in some cities.
We’ve also seen a sharp decline in African American household wealth due to the large amount of foreclosures in the black community. In a recent news report white’s had a net worth over $100,000 and black’s had a decline to under $2,000 of net worth.
The majority of this decline was due to the high rate of foreclosures in the black community. Upwards of 85%-95% of black household wealth was built with household equity in their homes.
Nationwide African Americans are more likely to be living in poverty.
In a since it was like a perfect storm that hit, most families were already struggling to pay their bills before the economic downturn and then when the economy turned south with job cuts, downsizing, interest rate hikes and adjustable rate mortgages maturing. Most families found themselves in deep financial trouble.
So is this the end of the line for most? Can an individual or family pull themselves out of debt even in this economic downturn?
The answer is yes! But I’ve found that most people are trying to get out of debt the wrong way. This leads to making emotional decisions instead of educated decisions when seeking debt relief.
Most opt to file bankruptcy and debt consolidation. Some seek help with credit counseling services. And some look for a quick fix with debt negotiation and mortgage modification.
In 2010 there were over 4,500 bankruptcies filed per day in the U.S. with more to come in 2011 and 2012.
The main problem that I continue to see is that individuals and families never seem to look at what actually caused the financial problem. Why because it will hurt! We can blame our debt problems on a job loss or downsizing but it really comes down to personal choices that we’ve made.
Tiny little choices with our money that added up to a huge mountain of debt! Student loans, credit card debt, automobile debt, furniture store cards, department store cards, pay day loans, signature loans, computer store cards, etc.
We were blinded by the illusion of 0% interest, no payments for 90 days, no interest for 1 year, lower monthly payments, buy now pay later.
Soon after depending on your income you’d find yourself barely able to pay your bills. It seemed like all your hard work and hard earned money was just wasted on a lot of stuff!
But we to remain consistent with our bad financial decisions we fight to keep all our stuff. We hide from the debt collector calls, we miss some payments here and there, we pay some of the light and water bill.
We start living what I call the “illusion life’’, we don’t want our family and friends to know that we are struggling so we pretend everything is ok.
Earlier I stated that most people try to get out of debt the wrong way by making emotional decisions instead of educated decisions when seeking debt relief.
Bankruptcy, debt consolidation, debt negotiation and mortgage modification are all legitimate debt relief options but you must understand that if you’re in an emotional state of mind you can end up doing something you’ll regret.
From my own personal experiences and from working with my clients I’ve found that regardless of your financial situation you need to follow a plan or you’ll never grab hold of your financial situation and you’ll continue to make emotional decisions instead of educated and calm decisions about your finances.
7 Steps to Living a Debt Free Lifestyle (Copyright 2005-11 The Real Debt Solution, Inc.)
Step 1 – Stabilize Your Household Situation
You should never pay any debt if you can’t provide the basic needs such as a roof over you and your families head, clothing, transportation, food, etc. After these needs are met you can move forward on paying down your debt.
Step 2 – Setting Up a Budget
Setting up a budget is key to your success when getting out of debt. You must understand to the dollar what is coming in and what must go out to maintain your household.
Step 3 – Setting Up a Debt Freedom Plan
After you’ve taken care of Steps 1 and 2 you’ll have the necessary information needed to figure out how you should get out of debt. If you’re bankrupt you’re bankrupt or you might find that you just need to stay disciplined with a plan of action to get out of debt. Regardless the most important thing is that you will be making an educated decision instead of an emotional decision.
Step 4 – Establish an Emergency Fund of Cash
An emergency fund is cash set aside for emergencies that might come up. This is not money from a retirement account or cash advances from your credit card. This is not a short term loan. This is what my granny called “mattress money”. Having an emergency fund will help with expenses such as unexpected car repairs, dental emergencies, short term cash for groceries, etc.
Most families are using their credit cards as their emergency fund. This is absolutely the wrong thing to do.
Step 5 – Accelerate Your Debt Freedom Plan
After you’ve done Steps 1 – 4 you’ll have a lot of momentum in your favor and you can take advantage of several strategies to accelerate paying off your debt.
Debt negotiation and selling assets you can no longer afford is an option. Maybe getting a part-time job or freelancing for extra money to pay your debt.
Step 6 – Action + More Action + Belief + Concentration = Unbelievable Results!
Getting out of debt is going to take some work. You must take Concentrated Action and you must Believe that you can accomplish your goal.
Step 7 – Start Saving For Life Experiences – Having Fun!
After you’ve accomplished your goal of becoming debt free you’ll began to save money for retirement. Opportunities to accelerate your saving will come about because you will be of the right mindset to accept and take advantage of real opportunities.
About the author.
Steven A. Williams and his wife found themselves over $300,000 in debt back in 1994. During the Christmas holidays they made a decision to get out of debt. By 1999 they were 100% debt free without filing bankruptcy using the exact same strategies above. In 2005 Steven started helping business associates pay down their debt and in 2008 he started helping families all across America especially in the black community. Steven has made Free Reports and Debt Freedom Videos available to anyone with internet access absolutely free by visiting http://nomoredebt2011.com you can also visit his blog at http://therealdebtsolution.com
