As we arrive into 2010 after the global financial crisis many American family’s are deep in debt and falling behind on their payments. This will affect their credit history and cause their credit score to be marked down. When you have a low credit score financial institutions are reluctant to lend you money and those that will lend you money want to charge additional interest to cover their risk. Far to many people will turn to a bad credit debt consolidation loan to solve these problems for them and find that they get deeper into trouble.

Going to a debt councelor is another way of looking for some magic solution to make your debts disappear so you can continue spending as you have in the past. Come on now – these things are all cop outs. If you are at all serious about sorting out your problems and gaining control of your life again then there is just the one way to handle this situation. Cut back your spending drasticly and pay off your debts. Now isn’t that easy – you don’t need a debt councelor and you don’t need a bad credit debt consolidation loan – all you need is a little bit of will power.

Before you default on a loan or on your credit cards speak to the financial institution about your situation and ask for an adjustment to the agreement. They will be open to your suggestions so have some sort of proposal worked out and put it to them. It could be that you just can’t make the payments each month on all your commitments but if they were each reduced by 20% then you could cover them. Some high interest rate credit cards may accept a suggestion to lower the interest charges for an agreed time.

Over the years I have been called upon to assist friends that have found themselves in difficulty and one case that comes to mind was a business owner whose business went broke but he had used his personal credit card to cover the business for a few months. He was now out of work and owed $60,000 on his credit card with no way of paying this. I went with him to his bank and told them that he would most likely go bankrupt as he had no income and no assets and they agreed to accept $6,000 as full settlement of the debt. We then went next door to another bank and arranged an unsecured personal loan for $6,000 and paid out the credit card debt.

This scenario was only open to this gentleman because his credit score had not been affected by his situation because he acted before going into default. Acting early on these things mean that you are seen as a responsible person wanting to find a way to meet your commitments. If you are trying to find remedies after going into default you are seen as an irresponsible person who is trying to avoid your responsibilities.

If all other avenues have failed and you have a bad credit score and you want to use a bad credit debt consolidation loan then you must proceed with caution. Avoid companies with attractive ads in newspapers or on TV because it is likely that these companies will be out to take advantage of you. Do some research on the internet and find companies offering reasonable deals. Compare interest rates and the terms and conditions of the loan. Beware of any low interest rate offers as the interest rate will apply only for people that have good credit scores and a penalty interest rate will apply for others. Look out for hidden charges in the terms and conditions like a substantial penalty for late payment.

So you have chosen a bad credit debt consolidation loan and you are now changing your life style and spending habits and concentrating on reducing your debts. Learn about your credit score and make every effort to improve your credit score over the next 12 months. When you have improved your credit score it is a good time to take out a personal loan at good interest rates and pay out this bad credit debt consolidation loan.

I have for a long time said that we should be educating our children in school all about finance and the responsible handling of our financial matters. Even it the articles found in this blog there is reference to this need for financial education and that the debt ridden society that we are now experiencing would be a better place if there was such financial education of our school children.

The news out of London this morning that they will this year be introducing financial education of our school children is a great step forward that I applaud. I call on the rest of the civilised countries to introduce a similar program into the school curriculum as soon as possible. In the UK they will start with the 5 – 6 year olds teaching them the currency and the value of the different bank notes. Each year more things will be added until when they leave school they will e equipped to handle the use of credit and credit cards and have a full understanding of mortgages.

This financial education will undoubtedly bring about a new class of millionaire, and I look forward to your suggestions on what we could call them. A young entrepeneur of 13 shall we say, having made his fortune from franchised lemonade stands, that cannot withdraw his money from the bank without his parents co-signing. The mind boggles at the possibilities that this could bring up and I wouldn’t be surprised at maybe the next Bill Gates at the tender age of ten years old.

We need to watch out for the bullys who will quickly learn how to threaten and assault in order to just take the financial gains of their peers. I can even see the headlines now “Bespectacled Lemonade Stand Entrepeneur Bashed By Baseball Bat Weilding Bullys”. Some will take the easiest road to earning their fortune and could well get it by applying pressure, with a baseball bat maybe, to those who choose to use their brains and their hard work to make money.

Maybe the call now has to go out to begin educating our children on their legal rights and how the law can protect them throughout their life. Or could it be that the old education system of readin writin and rithmatic just does not equip our children with what they need, to be able to enter society as young adults. I know, as an employer of young people, I am sadly disappointed in the quality of young people that apply for jobs in my business. It should not fall back on the employer to spend six months training and educating somebody that has just had twelve years of education.

Is there no system of learning from employers what skills are necessary in todays business environment and teaching those skills to our children. Or should it fall onto the parents to introduce further education into their busy schedules. I ensured my children were computer literate before they were ten and they are now further progressed than I am. They can create a web page and transfer it to a web site to which they can attract traffic and I expect that before long they will be able to keep me in a manner that I would like to become accoustomed.

While at first it is not such a big deal, because you are still making all the big payments for the mortgage etc. on time, it is not long before you start to feel the consequences of a falling credit rating. The credit card becomes the hardest to maintain because as your situation deteriorates you are putting more and more on the card. The monthly payments are getting to astronomical heights and you are now paying them late each month but the credit limit on your account is now about to be reached and there is no relief in sight.

Believe me I have been there and seen the terrible strain that it put on my family as we were unable to spend money on food for many days at a time. It was many years ago and I am pleased to say that it is now well and truly behind me but the memories still remain vivid in my mind and will be there till the day I die. I believed that I had it all under control and took us to the brink of bankruptcy because of my own pigheadedness. Had I acted earlier the recovery would have been easier and quicker and so my advice to you is to act immediately you believe that you are experiencing difficulty making your regular payments.

The solution for me was to consolidate everything except the mortgage into an Adverse Credit Loan, which was certainly a big help to me for the immediate to short term but the longer term efects really were no help at all because these types of financial arrangements are constructed to take full advantage of anyone caught in a situation where conventional loans are unavailable. So take my tip here and don’t leave it to the last minute to act because the recovery time will be longer and the overall pain will be more intense. Look for your real solution before the debtors are hammering on your door and if you go to your debtors with a workable solution already worked out before you go into default they will act favourably towards you instead of making it more difficult for you.

There are times when for some people’s situation an Adverse Credit Loan is the only way to turn because of some major surgery after an accident for example and it provides the platform to get back on your feet and recover your life. They should always be viewed as a risk as they will often hurt you over time, causing you greater financial hardship. The key here is to display that you now have the situation under control and to look to refinance the Adverse Credit Loan with terms more favourable.

And just on a lighter note I did repay everything in full and got my life together again but a few years ago a dear friend was in trouble after having costly surgery after a stroke. She asked for my advice and upon seeing that she had $60,000 outstanding on her credit card and no income I went to her bank manager and told him she would likely be bankrupt by the end of the week. Faced with losing this amount he accepted $7,000 as full payment on the credit card. The moral of the story here being that you should talk to your creditors, before they come to talk to you, because there is always a deal that can be done.