Q: I’ve made a budget and I’m following it but it always fails and my debt keeps getting bigger. How can I create a budget and stick to it?
A: Creating and following a budget requires honesty, determination and support. The following suggestions will require several hours of detail work, also providing information to help you start and follow through each step.

• Be honest with yourself: admit you have a problem that only yourself can solve, by creating a budged and sticking to it.
• Create a realistic budget, one that will cover all your needs, allowing you to start paying off your debt, and saving money. Set up reachable goals, as well as a deadline to meet them.
• Don’t keep spending. It might be difficult at first; but with time, healthy financial habits will become easier. Be honest about things you really “need” other than the ones you “want”. Although it might be hard not to spend on the things you want, you will be rewarded as you safely start paying off your debt.
• It is not easy to face the truth, but don’t feel discouraged. It took you some time to get into debt, and it will take you some time to pay it off. If you follow your plan, with determination and a few sacrifices, you will achieve your goal.
• Focus in all benefits a life without debt can bring you, and decide that this is the moment to achieve your goals.

 
Q: I feel like I’ve been accumulating a lot of expenses, but I don’t know if I’m really in trouble or not. How can I tell?
A: If you think you’re getting yourself into trouble with debt, you probably are. If you’re spending more money than you make each month, your debt will accumulate rapidly. And if you don’t have anything saved for the unexpected situations that hit us all (like a leaky ceiling, illnesses, or car problems), you may get even deeper into debt. Signs of debt problems include making minimum payments, late payments or no payments at all.
MasterCard additional resources:

• Test your knowledge about credit.

• How well do you know your credit card?

Q: What should I do when I can’t make even the minimum payment of my credit cards?
A: As soon as you realize you can’t even make the minimum payment of your bills, contact all companies immediately, and explain your situation. You might be able to negotiate a lower minimum payment, a lower interest rate, or even both. With a lower interest rate, a lower portion of the payment is directed to paying interest and a bigger portion is directed to the principal. Negotiating a different payment plan that you are able to follow, you will be avoiding late fees and other payment penalties that could increase your debt even more.
Q: I’ve received a few credit card offers in the mail, with lower interest rates. Should I consider changing my account to a lower interest rate card?
A: It depends on the offer, and on your situation; it might be a good idea to take the offer of a lower interest rate credit card, it might not. A lower interest rate can help you to pay your debt faster, since a smaller portion of your payment is directed towards the interest and a bigger one towards the principal. A lower interest rate card may help you payout your debt faster.
However, it is very important to review the details of the offer. Check if the lower rate is permanent or “introductory” only, increasing after a specific period of time (like in six months); and if it is “fixed” or “variable”. Variable rates are usually linked to the average rate; on the long run, increases on the interest rates could turn out to be higher than the one you have now. Check if there are any fees to transfer balances, and any other fees they might charge. Ask if there are changes on the interest rate in case you are late or miss a payment; if so, check at what percentage.
Q: What are the biggest mistakes people make while paying their debt? How can I avoid them?
A: The biggest mistakes people make while paying their debt are:

• Assuming it will be too difficult to accomplish it, so they don’t even attempt it.

• Assuming it will be too easy, and then getting frustrated and giving up quickly, after making wrong decisions.

To pay off your debt might be one of the hardest things you will do in your life, and it could take years to accomplish it; but it’s not impossible, and the rewards are worth the effort.
Before taking what seems to be the easy way out, remember that if it looks too good to be truth, it probably is. Debt consolidation “specialists” might promise you the moon, just to end up leaving you in a worse situation than the one you are now. Taking loans over your house could leave you homeless and filing for bankruptcy, crushing what’s left of your credit reputation for at least 5 years.
Q: Where should I go, and who should I trust when I feel I need professional help to get out of debt?
A: Once you made up your mind about getting out of debt, there are several well established credit and debt consulting firms willing to help.
We also recommend visiting the website for Secretary of Economy and Commerce’s Consumer Support (http://www.consumo.go.cr/), their e-mail is (consumo@consumo.go.cr), phone number (800-CONSUMO) and physical address is Avenida 3a., Calles 30 y 32 (de la escuela Juan Rafael Mora Porras 300 oeste). 
Q: What is the most important thing I must do to get out of debts?
A: You must do the following:

• Stop spending and begin paying your debt today;
• Be completely honest with yourself about how you got into this situation in first place, then start changing the way you handle your finances;
• Set up realistic goals, and make the decision to do whatever it takes to be free of debt.

If you are honest about your financial problem, and has your mind set to resolve it, you can do it.
Q: What can I do about my bills if I lost my job and have no income?
A: Being laid off is very stressful, and managing you bills might seam an impossible task or the last thing you want to do. However, acting fast may be the difference between managing your bills and collapsing.
First of all, stop spending and start saving money wherever you can. If you still can’t pay your bill, inform your creditors. Explain the situation and ask if you could make lower payments, have lower interest rates or both, to help you keep making your payments on time until you have income again.
By communicating to your creditors at once, instead of waiting to do so when you can’t make the payment or after they are past due, you can avoid fees and charges that would make your situation even worse. With a lower interest rate, a smaller portion of your payment is directed to the interest and a bigger portion is directed to actually lowering your debt. You also may try a credit and debit consultancy firm. There are several well established companies willing to help.
Q: I have thousands of dollars in medical bills and I feel like I’ll never be able to pay them off. What should I do?
A: Try to cut off expenses in other areas to free up money to pay your medical bills. Explore all the options and payment plans available to assist you.
However, if you have expenses in private healthcare, these are some important steps you need to take:
Review you bills carefully to make sure they reflect exactly the services you received.

• If you have health insurance, review each benefit to make sure you are taking advantage of all services covered by your plan.
• If you don’t have health insurance, talk to the hospital or health care provider about free health care programs. Some have counseling services to help you get informed about programs, and even help you filling up the paperwork. As an insured, you have the right to receive free medical care at the CCSS.
• If you can’t pay your private medical bills on the terms offered, talk to your heath care provider about payment plans.

 
If you can’t pay other bills in full, let your creditors know of your situation as soon as possible and ask them to establish realistic payment plans, so you don’t end up paying for additional costs like late fees and other charges.
Q: My house is very valuable, should I use it to pay for part of my debt?
A: Depending on your situation, it might be advisable to get a loan over your house to pay for your debt, but it might not. Taking a loan over the value of your house or a second mortgage might put it in jeopardy. Get more information about loans over the value of house to decide if it is a good option for your case.