Personal Debt Management in a Recession

Happy Saturday Everyone!

I’ve finally thrown my hands up and stopped creating unrealistic “plans” on how to pay off all of my debt.  I called a debt management company and have entered into one of the Debt Management Programs.  I’m still not sure how I feel about this move, but I can’t honestly see a way around it.  I’ve gotten myself into quite a pickle.  Living in DC doesn’t help, but it is all my own unfrugal fault.  So I’m now only 1 month into this and haven’t seen any huge problems, but I don’t necessarily want to see my credit score either.  Now- let me clarify, I’ve been told that what I’ve agreed to is NOT the same as the lowest rate that can be gotten in a similar program, but I am not 100% versed in the ins and outs of this industry.

The largest hit that I’ve been told to expect is from the closure of the multiple lines of credit, which, again, is to be expected, but not a drop as severe or as long lasting as bankruptcy.  So, here are the steps that I’ve taken:

1. Gotten all of my unsecured debt into a DMP, you cannot do this if you have under 10k in unsecured debt.  This type of program also does not apply to car loans or mortgages.

2. I’ve changed the number of deductions on my paycheck from 1 to 0 to try and help me at the end of the year though it means a smaller paycheck in the short term.

3.  I have NOT changed my 401K contributions.

4. I have NOT changed the $35 per week contribution that I make to a high yield savings account.

With the lowered monthly payments, hopefully I can get myself back into a shape that doesn’t resemble a pear financially.  Though I’m not sure why, I’m relieved while being alternately ashamed for having to take this step.  The shame comes from the fact that I have admitted defeat and the relief comes from the knowledge that the maximum time frame on this is 5 years, so long as I don’t put myself right back into this mess! 

My mission at this time is:

Find a way to live an active and social life (which I am not doing right now) while sticking to a budget that does not ignore retirement savings and keeps me out of credit card debt. 

I’ll keep you posted on the progress ;D

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