Published June 13, 2011
Every day thousands of people attempt to take on the colossal task of trying to dig themselves out of debt. Climbing out of debt can sometimes feel like a full-time job and takes serious work and discipline, but with the right education, preparation and willingness to succeed, it can be done.
There is a laundry list of issues to be confronted when getting out of debt. First and foremost is reigning in the spending by creating a tight and complete budget and sticking to it. That means either an individual or a family must sit down and list everything they spend money on and make adjustments from there. The next step is to figure out how much money is coming in the household after taxes.
Next, debtors must hatch a plan for credit consolidation, meaning reducing the amount of credit card debt and paying off the charges. Credit consolidation is important because many families carry too many cards and have a hard time tracking charges, leading to late or missed payments, which negatively impacts credit histories. Many people who have an overwhelming amount debt usually only pay the minimum amount on the cards, which prolongs the payments and leads to growing interest on the amounts owed without significantly reducing the principal.
Lifestyle changes must also occur. Families with children explain spending habits of the past are no longer viable; video games and movies will be taken out for free at the library and going out on Friday night switches to staying in and cooking as a family. Packing lunches for work, cancelling the morning coffee stops, coupon clipping and grocery store lists should also be part of the norm to help spend less. There are heavy sacrifices to be made by everyone in the family and if a savings plan is not fully thought out and planned before attempting to get out of debt then failure is almost inevitable.
One other way to relieve debt is to seek professional help. Companies able to help with credit consolidation, debt consolidation and other methods to achieve financial freedom can easily be found online. These companies train and certify counselors who speak with people in person or over the phone regarding their debt. The debt counselors aid with developing a budget, and offer free educational materials and workshops to consumers to help them comprehend how to consolidate credit card debt in the most beneficial manner, one that meets their individual needs and debt situation.
Most counselors at reputable companies are certified and trained in the areas of consumer credit, money and debt management, credit consolidation and budgeting. These counselors come up with customized plans for individuals or families so they can maximize their efforts to shrink their debt. They contact creditors and banks as a representative and hammer out deals, which make it possible for the consumer to live a productive day-to-day life and still pay their bills on time.
Howard Dvorkin, CPA, is the founder of Consolidated Credit Counseling Services, Inc., and the author of Credit Hell: How To Dig Out of Debt. He is also personal finance expert and consumer advocate who has been helping people for more than 15 years.