I recently attended a meetup with a group of people in serious debt. There was a discussion of what to do and some interesting ideas were brought out. The following ideas probably applies to those who are in a serious cash crunch.

If your present income has taken a hit and you are very stretched, you may have to take some of the following steps to relief your debt payment burden.

1. Get a second job - You will definitely get more income. You have to weight that against the time you have for your family. This is probably the least drastic measure you have to take.

2. Eliminate or reduce your 401k contributions - You can reduce your 401k contributions temporarily until your situation improves. Once your cash flow situation improves, you can resume normal contributions.

3. Negotiate with the IRS - If you really have difficulty with your payments, you can negotiate a payment plan with the IRS. You probably have to get a tax professional for this.

4. Downgrade to a smaller house - If push comes to shove, you can sell your home and move to a cheaper home. This may take a while (given today’s market condition), but should be explored.

5. Selling any high priced possesions - Think second homes, boats or even anything that is simply taking up space in your garage or closet.

These were the few ideas that were tossed back and forth. Please feel free to comment on any other thoughts you have.

This entry was posted on Wednesday, March 28th, 2007 at 1:47 am and is filed under Debt Reduction. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.