PUBLISHED: 5:13 PM on Wednesday, January 30, 2008
Post-holiday money management
The holidays have come and gone. During the season, many of us spent whatever money we budgeted for gifts or, for some of us, we spent over and above our means.

It's easy to do with the sales and the spirit of giving so closely associated with this wondrous time. Now it's a month later and the bills are arriving.

  Dr. Sonja Koukel
Debt is not linked to overspending alone. Individuals can experience financial problems when life takes an unexpected turn. This can occur when you or someone close to you loses a job or is laid-off, is undergoing medical treatment, or had a marriage or relationship end.

If you're faced with more debt than you can manage, what are your options?

First, you need to face the situation head on so that you can determine the underlying cause of the problem.

If you find that you're hiding the mail or have stopped opening your statements because you fear the balances on them, you are headed for serious financial trouble. Ignoring the situation will result in calls and letters from creditors, penalties and fees and in the extreme scenario, bankruptcy.

Next, take an inventory of where you are financially.

Open any and all statements and mail. Make a complete and detailed list of all debts. Create a "Creditor Inventory Form" in a table format.

Include the following information:

• Creditor name

• Address

• Account number

• Balance owing

• Monthly payment

•Interest rate

Now, review your budget. What is your current income? What are your current living expenses? The creditor inventory along with your income information provides you a baseline to make some important financial decisions.

One way to decide which creditors to pay is to set priorities.

Decide which debts will have the worst consequences for your family if you don't pay the bills. Usually these are the rent or mortgage payments, utilities, food, and car or transportation costs.

You need to ask yourself the tough questions. For example, television cable is nice but is it a necessity? How about limiting yourself to viewing only free local channels for awhile? Do you need Internet service at home? Online services are provided by many local libraries and at no charge!

Most importantly, talk to your creditors.

Remember that they don't want to lose money. They are often willing to work with you if you call them and explain the situation. Here is where the work you've done previously will come in handy. Let them know what you can pay and when you can pay it. When you make such arrangements, make sure that you follow through with the agreement. Creditors are less likely to work with you in the future if you have made promises in the past and not lived up to them.

I'm writing this article not only from the standpoint of an educator, but also from someone who's been there.

Years ago, I experienced a financial situation where I couldn't pay my debts.

A creditor called and offered to walk me through the process of comparing my monthly income to my debt. At the end of the discussion, the creditor stated, "Well, Mrs. Koukel, you don't make enough money to pay your bills."

That's exactly the point I had been trying to make all along!

This person was very helpful in setting up an arrangement where I was able to get my debt paid without incurring any additional fees. It was a win-win situation.

The most difficult part of financial debt is to take responsibility. Pretending to yourself that you have no money problems will not make it easier or make it go away.

Open discussions among the family about spending will help everyone realize that cutting down and setting priorities are a must until your debts are paid.

Though it will take some time and a commitment to change, you can work your way out of debt and back onto stable financial footing.

More information on this subject is available from the Cooperative Extension Service UAF at or the Juneau district office, 907-796-6221.