April 30, The Problem With Unsecured Debt (And How to Get Out of The Downward Debt Spiral)

Thought for today:

An unsecured loan is a loan requiring no collateral. It’s not like a loan for a house, car or other asset.  Creditors charge a premium rate of interest because of the extra risk involved in unsecured loans.

Because unsecured debt is so expensive, it causes extra pressure on borrowers to pay it back. The pressure increases the more the borrower falls behind.  Late fees pile on.

Types of unsecured debt:

Common forms of unsecured debt include credit card debt, overdue and unpaid utilities that cause interest and late fees, income taxes that fall behind the April 15th deadline, and missing the twice-annual payment schedule for property taxes.

Getting mired in the miserable cycle of debt, refinancing, and more debt gets harder to hide from the further down you go.  The outside world may overlook the debtor who  dabbles in credit card debt or juggles utility bills.  Missing taxes start another story.

It gets worse.  Forget about the payday loans,  which can charge as much as 15% per week.  That’s an incredible 780% APR!  And then the loan sharks…

Unsecured debt is the compulsive debtors unraveling.

A member shares how DA solved the debt spiral:

“I was an under earner as well as a compulsive debtor.  I had a good profession, but I earned the lowest point on the typical pay scale range.  I tried to pay my debts, but life just gets out of hand.

“By the time I got help in DA, my debts were to a point where I had to take a moratorium for a month, while I tracked my spending and income.  Then I had a Pressure Relief Meeting, where we decided together that I could start making very small debt payments, forgetting about my credit score for the foreseeable future.  It was already at the four hundreds level, so there wasn’t much further it could go.

“Eventually the late fees and interest fees maxed out, and a credit agency took over the debt.  I kept making the payments, this time to the new agency.

“I established a personal relationship with the “credit counselor”, and I  shared my DA numbers with them, to explain my minimal payment.  There was simply nowhere to pinch any more pennies in my spending plan.

“The creditors weren’t happy with the amount I was paying them, but they kept cashing the checks anyway, and I was able to negotiate my interest fees away.

“DA also taught me to put up collateral if I have to borrow.  I hocked my guitar when I had to at one point.

“In the end, I was able to pay off my unsecured debts and even buy a car and a home.  It took a long time, but with the help of my Higher Power and DA, I rebuilt my life and my attitude has never been better.

“I realize now that I am more than what I owe, and I am also more than what I own.  Now, when I look at unsecured debt commercials, I think of the card as a burning hot flame that I need to pass.”

Do I think of unsecured debt as if I am recoiling from a hot flame?

Meditation for today:

Take confidence from knowing you are in your Higher Power’s plan.  If you ever doubt it, think to the miracle of your own life.

You made it to this point, where you are racing these words because you seek truth.  You are acting on faith at this moment, and faith is what carries you to God’s plan.

Affirmation for today:

“I am a child of the universe, no less than the sun or the stars.”

“I have enough, and info not need to borrow to get more.”

Prayer for today:

“I pray for acceptance of myself and my goals.”

Follow through:

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