| As an increasing number of people are finding | | | | customer service representative tells you there is |
| themselves in over their heads in debt, many are | | | | nothing they can do, don't just say thank you and hang |
| turning to various debt management programs for | | | | up! They are reading from a "what to say when the |
| assistance. Before you sign on to one of these | | | | customer asks..." type of script, so be sure to ask to |
| programs, you might try to make your own debt | | | | be transferred to the supervisor and be persistent (yet |
| reduction plan - and save yourself having to pay a | | | | polite). |
| company fees for their services, or avoid the trouble | | | | Step Three: Work Out a Repayment Plan |
| of potentially dealing with a dishonest company. | | | | You have to be committed. You have to be serious |
| Step One: How Bad Is The Situation? | | | | about wanting to get rid of the debt, or you may as |
| Before you can honestly make a go at paying off | | | | well stop right here because you aren't going to get |
| debt, you need to have accurate knowledge of how | | | | anywhere if you start a debt reduction plan and quit a |
| much debt you have. Get out your checkbook register, | | | | week later. You can't approach it like a diet that you |
| bank statements, credit card statements and anything | | | | start before Thanksgiving and quit because you want |
| else you use to track your finances and see if you | | | | to eat two helpings of Thanksgiving dinner.. start back |
| can pull together a complete list of debt. Include the | | | | up afterwards and quit for Christmas and New Year. It |
| name of the creditor or person you owe, how much | | | | probably took you a few years to get into serious |
| you owe them, what the minimum payment is, and | | | | debt, and unless you win the lottery or are handed a |
| how much the interest is. | | | | ton of cash, it's going to take discipline and time to get |
| Make a second list of other financial obligations each | | | | out of it. |
| month - your rent or mortgage, utilities, etc. This way | | | | Look at your lists and see where your money is going |
| you can see how much money you're paying out | | | | right now. First of all, eliminate all unnecessary |
| versus how much you're receiving. If your income isn't | | | | expenses (coffee on the way to work, picking up |
| greater than the minimum payments and living | | | | extra groceries on a whim when shopping for meals, |
| expenses on your list, you know you're in a really bad | | | | eating in restaurants or take-out, buying books when |
| situation. If the income is the same or greater than | | | | you can go to the library, etc). Change your list to |
| what you owe - the situation is troublesome but | | | | reflect new interest rates or minimum payments you |
| probably not as bad as you thought. | | | | maybe succeeded in arranging from doing Step Two. |
| Either way - making your own debt reduction plan is a | | | | After subtracting your required living expenses from |
| good place to start digging yourself out of this hole. If | | | | your income (your rent, your utilities, your gasoline, car |
| after you try this with 100% commitment you find you | | | | insurance, etc), take the amount you have left and |
| still can't make any headway in reducing debt, you | | | | decide how to allocate it to your debts to pay them |
| might want to consider other options (debt | | | | off. You can use a "debt snowball" to do this. The key |
| management companies or a debt consolidation loan, | | | | is to pay the minimum payment on all debts except for |
| for example). | | | | one; which you send as much money as possible |
| Step Two: Call your Creditors | | | | month after month until it is paid off. Once the account |
| This step can be challenging and it's the reason many | | | | is paid off, you send the money you had been sending |
| people feel working with a debt management | | | | to it on to the next account on your list (added to the |
| company is helpful because they will actually try to | | | | minimum payment you were already sending). As you |
| negotiate on your behalf. What you may not realize is | | | | pay off accounts your payments get bigger to each |
| they don't have much more pull in getting lower interest | | | | of the accounts on your debt list, which accelerates |
| rates are different repayment terms than you do on | | | | repayment. |
| your own. | | | | When you use a debt management company, often |
| There is nothing stopping you from calling each of your | | | | you are required to stop making payments on some |
| credit card companies and explaining your situation. | | | | or all of your accounts in order to get them three |
| Right now, they are likely to be getting a lot of calls | | | | months (or more) past due just to get the company to |
| from people trying to do the same thing, so it may be | | | | work with you. In some cases, you may already be |
| more difficult than ever but you won't know if you | | | | this far behind and the option for using a debt |
| don't try! Ask for a lower interest rate for a period of | | | | management company may be a good one. If you |
| six or twelve months, to help you pay down your debt | | | | aren't quite that behind on your debt, you can work out |
| faster; or ask for any other payment arrangement that | | | | better repayment terms and become disciplined with |
| helps more of your money go to the principal balance | | | | your finances without having to damage your credit |
| to enable you to get out of debt. You may be | | | | score further or make payments to a debt |
| pleasantly surprised at the offer you receive - if the | | | | management company. |