I Owe How Much!?

Elizabeth Perez, conservative candidate for Houston City Council At-Large #2 sent the following in about this Saturday's Cain-Gingrich Debate:

Okay, we heard the POTUS and the Speaker of the House give their arguments for the debt crisis. Here's the layman's explanation on how debt actually works.

When you are about to max out your credit card or already have, you do NOT ask your credit card company to raise your credit limit. You negotiate with your creditor. You have options.

First option, you ask for a reduction in the interest rate and continue to make the same monthly payment. Under this option, you are informing your creditor that you are willing to continue with your financial responsibility. This option also allows for you to pay off your debt quicker with a lower rate.

Second option, you request a reduction in the monthly payment and continue with the same interest rate. This option comes if your creditor declined the first option. Under this option, your monthly note is lower and allows temporary economic relief for you if you are struggling to make the original payment. However, this option also allows for you to make the lower payment plus send in the difference on a month that you are able to make the original payment. Example, if your original payment is $1000 and your creditor reduces the monthly payment to $800, then you save $200 on the payment until you are back on track financially. Once you are back on track financially, you continue to make the $800 payment plus send in the $200 difference and apply it to the principal amount to help you reduce your total debt.

Creditors would rather collect on money guaranteed rather than collecting on an insolvent individual/entity. So, if times are really tough for you, call your creditor again and see if you can get both options AFTER you have already secured one of the options and have shown a diligent effort (usually 6 months to 1 year after first negotiation) in repaying the debt.

NOTE: Creditors are more likely to reduce your interest rate (first). In the meantime, if your creditor gives you a break, do NOT continue to spend in the same manner that got you in that financial rut. Re-evaluate and PRIORITIZE your financial obligations that are essential for daily living (mortgage, groceries, fuel, utilities, home repairs, etc) and quit spending disposable income (eating out, movies, concerts, remodeling/redecorating the home, etc). These simple economics will get you out of a rut, keep you afloat and eventually help you become economically prosperous.

Mr. POTUS & Congress, it's NOT rocket science! Now, cut the theatrics, and QUIT spending my tax dollars!

~Elizabeth C. Perez, Candidate for Houston City Council At-Large #2


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