After the holidays, Arkansas consumers may find their finances stretched, and some suggest immediate action may be necessary. Although the bankruptcy option is available, many people may want first to try stricter debt management before taking that step. However, ongoing credit card debt can result in additional interest and late payment fees.

To understand the extent of the problem, the most appropriate step would be to obtain a credit report to check obligations. Interest rates should also be verified. This is also an opportunity to check for errors and report them. Before drafting a budget, some suggest recording every cent that is spent in one month, even insignificant amounts. The amount of money spent on non-essentials often surprises consumers when they review their exact expenditures afterward.

A list of expenses will be handy when a budget is created, and the 50/20/30 rule is often suggested. Rent or mortgage, utilities, car payments and other fixed costs can be allocated to 50 percent of available money. If this exceeds 50 percent, cutting out things like gym memberships and cable subscriptions can be considered. Putting money in savings or investments can make up 20 percent, and 30 percent is designated to cover flexible spending, such as entertainment, food hobbies and more. This is typically an area in which significant savings can be achieved.

People are often amazed at the additional funds that can be obtained by selling unused items online or at garage sales, and a second job can also be helpful. Refinancing and negotiating lower interest rates may also provide additional funds that can be applied to debt payments. While these suggestions may bring debt relief in the long run, they may not prevent creditor harassment and foreclosure threats. In those circumstances, the protection offered by personal bankruptcy may be considered. An experienced Arkansas attorney can explain the requirements and options under the Bankruptcy Code to assist consumers in making informed decisions about their financial futures.

Source:, “How to pay down your debt in the New Year“, Accessed on Dec. 30, 2015