The majority of us are debt holders. We have mortgages, car payments, student loans, and usually even payment plans for medical bills or other debts. Many of us have to make quarterly tax payments. Certified public accountants see this all the time. A client comes in, seeking advice on how to get out of debt that has become overwhelming.

Your CPA in Fort Collins will offer you some sound alternatives, but beware, there are far more options currently being marketed for debt relief that in all actuality don’t provide any real benefit, and can even make your situation worse in the long run. Before you decide which options could help you with managing debt, it is worth the time to consult with your business consultants or CPA firm in Fort Collins before making any decisions.

One piece of advice that is pretty simple, is to cut expenses and raise income. This could mean making some uncomfortable choices, but it is the best overall strategy for getting debt under control. It is not fun, nor is it convenient, but it will go a long way towards getting out from under credit card debt, payday loans, borrowing from your business for your personal expenses, and other measures you might be using to stay afloat.

To appraise where you’re at financially, make out a budget. It should include:

• Required expenses: housing, utilities, car payments, various forms of insurance, tax payments, etc.
• “Flexible” but necessary expenses: This will bring in your grocery budget, your household expenses, tuition, daycare, car maintenance, entertainment, clothing, and other expenses that are routine, but can be tweaked.
• Impulsive or random spending: If you look at the past few months, where have you spent money that was not budgeted? It is good to have a reserve in your budget for things like picking up the dinner tab or those seat covers that were on sale at a big box store. All of us have these unexpected expenditures, it’s impossible to predict every sale, social event, or other random expenditure, but take a look at how much of your budget it is taking up.
• Emergency expenses: This will include a car breaking down, a computer monitor that got knocked off the desk by your cat, or leaving your winter coat behind at a restaurant only to never see it again. As with impulsive spending, we all have emergency spending as well.

Once you have established what you are actually spending, and have determined your actual income, you are armed with the information you and your CPA In Fort Collins need to make some decisions.

Depending on your unique situation, where to cut, and how to increase will vary.

Sometimes trading in an expensive to-maintain car or a gas guzzler for something cheaper will save you several hundred dollars a month. This could be in both car payments and insurance and gas. This is not the solution for everyone. Again, determine where you can “downgrade,” even if it is temporary.

Your best asset, along with the advice of reputable business consultants, is creative thinking. You can tackle cutting back on a large expense, or on several small ones. You can even actually invest in something, knowing that it will bring you a profit within a reasonable amount of time which will give you the funds to pay down debt.

Here is an example of what one family did to bring down their debt, and get their finances under control. Remember, each situation is different, but by working with your CPA in Fort Collins, getting some solid advice, and using creativity, debt management can be achieved.

This particular family had a very expensive mortgage. This was their largest expenditure. After going over their budget, they determined that by purchasing a smaller home that needed rehab, and living in it for a year while renting out their beloved higher mortgage home, they could in a year sell the rehab house and use the profit to pay down debt. This is one situation where an investment, even though the family was in debt, paid off. Fortunately, they also had the construction and electrical skills to rehab a home.

Another family decided they didn’t have many areas where they could reduce expenses, so each adult partner picked up a part-time job in addition to already owning a small business, and the other had a regular full-time job as a teacher. It meant not much time for anything else, but within 2 years, that extra income got them out of debt. This would not work for people who had small children to care for or other demands on their time, but it is a sound creative solution. Second jobs, as time-consuming as they are, can be helpful to many in hard times.

These are just two examples of how specific families got their debt under control without falling prey to a debt management scam, and after going over their options with their CPA in Fort Collins. If you want debt relief, and feel hopeless, don’t. There are many options. Give us a call today, and set up an appointment where we can help you go through your debt and provide sound options, then use your creativity to implement a solution