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If you have decided to go to a debt counseling organization for help with your finances, it is important that you learn from the experience. Otherwise, you will simply find yourself back in trouble, perhaps much worse the next time around. The first thing that you need to figure out is how you got behind in the first place.

Next, it will be important to recognize how a good, responsible spending plan can make life easier. A spending plan will help you organize your income and expenses. You will know exactly where each dollar will be going each month. This is very important.

People who are poor financial mangers tend to spend without a plan and end up hoping that they have enough money left over to pay their most important bills, i.e., mortgage, rent, car and food. On the other hand, individuals who are successful at managing their money choose the opposite approach. They pay their fixed expenses first and then put money aside for the non-essentials.

Lastly, the importance of keeping up with your finances and the potential problems that arise from misusing credit is a must-learn lesson for an individual or family who has been forced to go down the path of debt counseling.

Cha-ching

Lesson #1: What caused the debt problem: Perhaps the biggest lesson that someone who has gone through debt counseling should learn or figure out is what led them into financial trouble. Does someone in the household have a problem with compulsiveness or perhaps a shopping addiction? Were the financial problems simply related to not keeping good records of what was coming in and what was being spent? Is someone depressed and thus spending money in order to feel better? Is the family attempting to keep up with the “Smiths”?

The reason why figuring out the cause is so important is because nothing will likely change if the underlying issues are not treated. For example, a person who has a shopping addiction may need to get counseling. If he or she does, then that person might stop spending once a financial crisis arises. However, without help, it is likely that these people will resume their old habits when they feel that they are able to. If the problem with spending has to do with simply not keeping good accounts, this can easily be remedied by purchasing budgeting software.

Lesson #2: The importance of a spending plan: People who have been forced to take advantage of debt counseling to get their finances under control should now understand the importance of a spending plan. Unless a person has lost his or her job or has simply taken on more expenses than his or her income can cover, not regularly budgeting is often the culprit.

Without a spending plan in place, it is very easy for your financial situation to become a free-for-all, with each partner attempting to buy what he or she wants before the money runs out. This will become disastrous. Individuals have to come up with a budget and stick to it as much as possible.

Lesson #3: Why tracking your finances and implementing changes immediately will prevent many problems: A budget is not necessarily set in stone. Things happen and circumstances change. You might find that you have not allotted enough money for certain bills or do not need so much money for other things. By tracking your expenses, you can figure this out and make the appropriate changes. You may also experience an increase or decrease in income which may also affect your budget. This way, your budget may become a bit fluid and that’s perfectly fine.

The trouble comes when you don’t recognize or respond to financial changes that may affect your budget. When you don’t take this information into account, you may not know that you need to cut back on some expenditures or that it has now become necessary for someone to pick up more hours at work, get an additional job or even a completely new one.

To avoid this, simply reconcile your accounts every month. Check and see where you have budgeted too much or too little and then make adjustments. Better yet, reconcile as you go along. As soon as you pay a bill, check it against the budget and see if you are now ahead or behind, then make adjustments as needed.

Millions of Americans are in a tremendous amount of debt. While the particular causes differ, much of the debt is due to what seems to be a “Buy now, pay later” way of thinking. Americans rely on debt, loans and credit cards to purchase things that they need and things they do not. Credit cards more often then not, act as safety nets instead of savings accounts. Our economy encourages these practices. Buying things we can’t afford, on credit, actually helps keep the economy afloat. If nobody is buying anything, businesses suffer.

However, getting carried away is extremely risky. Everything has to go perfectly to avoid disasters. When it does not, individuals find themselves no longer able to pay back what they owe or make purchases. This is exactly what is happening during the current recession. The economy stalled, people lost jobs and are unable to pay their mortgages or credit card bills. Many people were forced to declare bankruptcy, with many more currently in the process. The best way to avoid such scenarios is debt prevention. You won’t have much trouble paying your bills if you don’t have any, especially none with high bearing interest. In this article, we will be providing some solid and highly effective debt prevention tips. Aside from that, we will also discuss ways to manage the debt you currently have.

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Consolidate loans like a Cobra

bt Prevention Tips

Create a Budget: This is one of the simplest tips but it is also one of the most effective ones. Knowing exactly how much money you have and how it will be allotted enables you to get your finances in order. Individuals who spend money without a plan often end up with more debt than money, unless they are extremely wealthy. Creating and using a budget does not necessarily mean that you can’t do anything fun or make special purchases. You just need to plan ahead. While coming up with a budget can be stressful, you will find yourself much more relaxed and at peace because you will not have to worry about running out of money.

Consider Using Cash: Often times, people get in trouble because they use debit and credit cards. Both of them allow you to spend more than you have (yes, debit cards have overdraft protection), which can get you into serious trouble. On the other hand, when you commit to using cash, you will only be able to purchase what you have enough money for. You may not want to use cash to pay bills though, because you won’t have any record of it. However, you can purchase groceries and similar things this way.

Make Lists: One of the easiest ways to get in trouble is to go shopping without a list. When you wing it, you are likely to spend more money and buy things that you don’t really need.

Save: If you have adequate savings, you will not have to turn to your credit cards when unexpected expenses arise. When you are forced to use your credit cards to make big, unexpected purchases, this can quickly lead to an accumulation of debt.

Debt Management Tips

Consider Financial Counseling: If you find that you can no longer handle your debt load and need some help budgeting, consider working with a financial counselor. They can help you develop a budget and give you some extremely important tips about financial planning.

Create a Doable Plan to Pay Back what You Owe: You may need to call your creditors and attempt to negotiate your current interest rate to one that is lower or perhaps even ask them to drop your minimum payments. If you can prove a hardship, they may agree to this for a certain period of time.

The above tips represent very simple but still highly effective ways to prevent future debt and properly manage any debt that you already have. If you follow them, you should see real changes in your finances and experience greater feelings of control and peace of mind. When you are no longer worried about money, this can help relieve a lot of stress. Though it may seem difficult at first to deal with your finances and many people avoid this approach like the plague, it is absolutely necessary. The longer you hold off, the worse things will get.

For individuals who find themselves in an overwhelming amount of debt, credit counseling may be a good option. Many people have heard about credit counseling but don’t have a firm grasp of what it is. As a result, if they don’t choose to investigate any further, they miss out on a debt relief option that has the potential of being extremely worthwhile.

Credit counseling offers individuals or families much more than the name suggests. At first glance, one might assume that it might merely involve sitting down and talking to someone about your finances. However, it includes much more than that. In the vast majority of cases, credit counseling companies will help you negotiate lower interest rates with whatever credit card companies you owe money to. They may also be able to help you get out of paying late fees and penalties. Credit counselors can also create a debt repayment plan. Your “job” will be to send them money (a predetermined amount) every month, which they will use to pay your creditors. Most will attempt to have you debt free in 3-5 years. You will likely have to pay them some type of fee, though you might not be required to if you are working with a non-profit organization that only accepts payment on a voluntary basis. Some don’t ask for any fees at all.

The Queen smiles at good debt management

Credit counseling can help you get organized financially, eases your financial worries and can also help you get back on track as far as just about anything else is concerned if you are willing to make things happen. Statistics show that 50% of the individuals enrolled in credit counseling programs don’t finish: it’s all up to you.

Though credit counseling is great for some people, it isn’t necessarily a good choice for everyone. Some people don’t need it and for others, it may be too late to do them any good. Below, we will discuss the tell-tell signs which might signal your need for credit counseling.

You are having trouble making the monthly payments on your credit card: First of all, if you are only able to make the minimum payments, you are already in trouble because you are merely staying afloat and not making in headway. If you find that you can’t do the latter (make the minimum payments), credit counseling may be a good option. These companies may be able to get you a lower interest rate, which will decrease your monthly payments, allowing you to keep more of your cash in your pocket.

You are having trouble paying your bills on time: Being late will hurt your credit. Most people understand this. Because a credit counseling company will be paying your bills each month, you won’t have to worry about being late. Now, this will only be the case if you choose a good company, one that is extremely professional. Your payments should also be cheaper if they are able to negotiate a lower interest rate, one which will make it easier to pay what you owe.

You keep getting phone calls from bill collectors: Bill collectors will call and hound you when you are consistently late paying your bills, if you have failed to make any payments nor made an effort to contact them and work out some alternative payment arrangements. If this describes you and your situation, it is a huge sign that you need help. Credit counseling may be able to improve your situation.

You have not been able to negotiate lower payments or interest rates yourself: Your debtors make the rules. They do not have to work with you or anyone else, not even a credit counseling organization. However, because they understand the value of such companies to their bottom line, if you are trying to make an effort to pay them their money back, this benefits them and they will be willing to work with some credit counseling companies. Many times, they have established relationships with particular credit counseling companies and will agree to be a little bit lenient. Typically, the companies they work with have been around for a while and have developed a reputation that revolves around integrity and professionalism. Some credit card companies will have a listing of credit counseling companies that they do business with. If you pick someone from their list, this significantly increases your odds of working with a really good company.

One available option and often times a very good one is to consolidate debts for people looking to get a handle on their finances. A debt consolidate loan can take many forms. A person may opt for a signature (secure), mortgage refinance or home equity loan. They may also borrow against their retirement fund or use a credit card. Transferring all of your debt to a single loan can be beneficial for a number of reasons.

Loans consolidate allows people to become better financially organized. Instead of paying multiple lenders, they are able to make only one payment each month. Also, people are able to take advantage of lower interest rates. This enables them to pay back their debt faster and in many cases, gives them the chance to decrease their monthly payments. Below, we will take a look at some of the various options the market has to offer and will briefly discuss the pros and cons of each.

Unsecured (signature) loan: An unsecured loan is one that does not require any collateral. This helps protect the borrower because even if you fail to pay back the loan, none of your assets are subject to being repossessed. However, your credit will suffer if you do not make your payments on time or refuse to pay back what you owe. Unsecured loans tend to have higher interest rates and may be more difficult to qualify for, especially in today’s economy, because the company has decreased leverage. If you choose not to make your payments, there is little they can do but badger you and hope that you come around.

For these reasons, this may not be the best loans consolidate option unless you have really good credit and can secure an extremely affordable loan. Remember, in order for a debt consolidation approach to be effective, you must find a loan that is cheaper than what you are currently paying.

Secured loan: A secured loan is the opposite of an unsecured loan. These types of loans will require some type of collateral. This might be your car, your home or some other types of property. If you fail to pay back the loan, the lender can come and take possession of whatever you put up for collateral. Secured loans tend to be cheaper and the interest rates lower because the company has the option of taking your assets if you fail to pay. Be very careful before going this route because if something happens and you are not able to make payments, you can end up losing big-time.

Mortgage refinancing: At one time and for many people, a mortgage refinance loan was an easy and convenient way to consolidate debt. Times have changed. Because of the large number of recent defaulted mortgages, it is harder then ever to secure a refinance loan. Therefore, unless your credit is really good, you may have a hard time using a mortgage refinance loan to consolidate debts. However, it is still an option for some.

Home equity loan: A home equity loan used to also be a very common way for people to consolidate their debt. These types of loans were known as second mortgages. Typically, the interest rates offered are pretty low and are much cheaper then credit card interest rates. This makes it a very attractive debt consolidation option. Again, because of the mortgage crisis, these may be more difficult to obtain nowadays.

Retirement loan: More and more people are borrowing against their retirement to pay off their credit cards, only to have to pay this money back. This may be worth the while in some cases. However, it is important to note that there will likely be penalties and taxes involved which can cut into the amount of money that can actually be used and everything might end up being more expensive then you might think.

Credit card loan: In an effort to entice customers to leave one credit card company and join their own, some companies will offer reduced introductory rates. They will give you a great rate if you transfer all of your other credit card debt to their card. But wait, there is a catch! You will only have so many months to enjoy the reduced rate. After that time, it will increase significantly. This means that if you are not able to pay back what you owe in that amount of time, you will end up with large monthly payments again. However, if you are able to pay off your debt in whatever amount of time the credit card company gives you the reduced rate, this could a great way to save some money and pay off your debt faster.

Loans consolidate, the new buzzword. Many people who are dealing with an overwhelming amount of debt are desperate to do something. Often times, they just don’t know what to do. There seem to be a lot of available options out there: bankruptcy, credit counseling, debt settlement, hiding one’s head in the sand (as strange as it may sound, a lot of people unfortunately choose this option) and debt consolidation are all possible choices, depending on your situation. With so many choices, it can be difficult to decide. In this article, we will be putting Loans consolidate under the microscope in an effort to help you decide if it is indeed a good option for you.

Loans consolidate can be a very good way to get a handle on your finances. There are a number of ways to go about it. You can take out a loan specifically for this purpose. You can associate all of your debt with a single credit card or you can work with a debt consolidation or credit card company that will lump all your debt together and then accept a

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single, monthly payment from you which they will pay out to your debtors.

Debt consolidation can help you pay off your bills faster if you are able to secure an interest rate that is cheaper than the one(s) you are currently paying. For example, imagine you have three credit cards and are being charged 20% interest on each. If you are able to get a single loan for only 9%, or transfer each balance to a single credit card at this rate, you may be able to lower your payments and pay off your debt faster. In order for debt consolidation to work, you must be able to secure a lower interest rate. Another positive is that you can lower your monthly payments. This makes you more liquid and frees up money which can go towards meeting other monthly obligations.

Debt consolidation won’t be able to help everyone. People who are not able to get a lower interest rates and who aren’t able to afford even reduced monthly payments made possible by consolidating their debt will need to look for other options, perhaps even bankruptcy. It also is not a good choice for people who have not made a commitment to curb their spending and get out of debt. In these cases, they might be able to “stop the bleeding”, so to speak, but they will only end up back in trouble again.

It is important to discover the underlying reasons for financial mismanagement. Sometimes, an emergency arises and a family is forced to use credit cards, pull their savings and put all of their money toward dealing with the crisis. Other times, financial trouble is due to immaturity and not being able to control impulses. Whatever the reason may be, it is important to identify it and attempt to make real lasting changes so that the situation doesn’t arise again and if it does, it won’t be because you didn’t take the necessary steps to prevent it. Setting a budget (and sticking to it) is the key to steering clear of financial trouble down the line.

Debt consolidation can be a very good way to get out of debt and lower your monthly payments. Being cash strapped can be quite distressful. If the majority of your family income is going towards paying off financial obligations, you face the risk of financial ruin if an emergency arises or at least further financial strain. You will be forced to use credit cards to handle any unexpected expenses or will be wiped out. Debt consolidation can help alleviate some of that pressure by freeing up more of your income. This extra money can be put aside or used to further pay off debt.

Again, it is important to note that debt consolidation is not beneficial in all cases. If you are unable to get your interest rates lowered significantly enough so that your monthly payments are lower or are unable to pay off your debt faster, then it will be a waste of time. Also, if you have not identified the reasons why you are in trouble and have not attempted to make the necessary adjustments, you will likely find yourself back in trouble. To make it worth your while and in order to see lasting changes, you will need to take action. This might involve taking on a second job or cutting back and will certainly include creating and adhering to a budget.

Smile and be patient as your debts disappear

The long protracted economic challenges have led many people into debt. For many, loans consolidate or consolidate debts is seen as a good idea. Deciding if it is best to consolidate debts is a personal decision that needs to be thought out and calculated. There are many different banks and loans consolidate companies out there, and each option is unique. The short answer to the question ‘should I consolidate debts?’ is impossible to state. There are too many factors involved to come up with a one size fits all answer.

What are the factors in determining if loans consolidate is for me?

The type of loans consolidate program you are seeking is the first factor. Are you considering to consolidate debts with a home equity loan? Are you thinking about a loans consolidate plan involving a personal loan? Do you have equity besides you house? As you can see, one good question will bring up many more. If you want to consolidate debts, you need to first examine your present situation in detail and not make any assumption.

The next factor in understanding if its wise to consolidate debts is determining cash flow. How much can you pay each month on your loans consolidate program? What is the interest rate on the consolidate loans available to you? Is your income steady or does it fluctuate? In order to know what the best loans consolidate option is, you need to first have a detailed accounting of your present financial condition including income and expenditures. The formula for a successful consolidate debts plan starts with a strong foundation based upon honest appraisal of your current debt situation.

The next step is to dig even deeper into your debts and liabilities and make a detailed list of all your current credit card balances, interest rates, fees, and monthly payments. You will also need to list all other loans such as personal loans, auto loans and line of credit loans.

Once all this data is gathered, checked and verified you can enter it into a spreadsheet and a loans consolidate calculator. There is a good one here and many more to be found on the internet. To know if you should consolidate debts is not always an easy question, but one worth researching. Remember to stay positive and remain patient. Regardless of the actual loans consolidate plan you choose, they all require consistency and patience. One step at a time, you will get out from under the burden of debt. Stay positive and keep taking steps in the right direction.

Don't throw your money away!

It seems that almost every time you turn on the television or the radio, you are inundated with ads from debt management or consolidation companies. They promise that they can help you avoid bankruptcy and silence calls from creditors. With so many people mired in debt, coupled with a sluggish economy that is leaving more and more folks without jobs, there definitely is a market for these services. Many individuals who are desperate and looking for a way to hold on to what they have and improve their financial situations are turning to such companies as a way to get back on track.

However, what some people are finding is that they are ending up worse off than when they began after using such companies. This is because some debt management companies are not actually looking out for their client’s best interest but instead are looking to fleece them by charging large administrative fees. Other companies have no intention of doing what they promise. Instead, they are looking to get wealthy on the backs of people who are willing to hand over their hard earned money in a last ditch effort to correct their financial woes. These types of establishments often leave their members worse off than when they walked through the door. Below, we will take a look at which types of debt management companies you should avoid.

a. Avoid companies that prove to be unreliable: Refuse to do business with companies that don’t do what they say they will. This can be difficult to gage at first, so you need to be on the lookout for the little things. Are they hard to reach? Do they refuse to return your phone calls and/or emails? These are often tell-tell signs that a company is unprofessional and perhaps even unethical. If they are ripping people off, they won’t want to answer their phones or any other type of correspondence. Instead, they become masters of avoidance. There is always an excuse for why they aren’t able to do what they promised they would. Do not do business with these companies and if you have already, do whatever you can to sever the relationship.

b. Avoid companies that charge high fees: There are many non-profit debt management companies that will work for you free of charge or for only a small monthly fee. In some cases, the fee will be voluntary and you can opt out of paying it if you wish. A payment of between $15-$25 per month is about the norm. Also, watch out for companies that ask for large amounts of money upfront. Often times, these will be disguised as “administrative fees”. Even though these are not unheard of in the industry, you shouldn’t expect to pay more than $50. Any company that is attempting to charge you significantly more than that should not get your business. You can find many debt management companies which will provide the same services for far more affordable rates.

Some companies will attempt to get you to pay hefty fees by promising that they will be able to fix your credit or get you much lower interest rates. Remember, it doesn’t matter how good it sounds, a debt management company cannot guarantee that they can get you a certain interest rate or wipe your credit file clean. Sure, some may have established relationships with certain creditors and they will likely be able to get your interest rates reduced but credit card companies do not have to offer lower rates (there’s simply no way to force them). Keep this in mind when you meet with a fast-talking debt management company representative who seems to be promising you the world. The truth is that non-profit companies can provide you with the same services without the excessive fees.

c. Avoid companies with a poor reputation: This one should be obvious. However, you would be surprised at how many people do not check the backgrounds of the debt management companies that they are considering working with. This is a big mistake and can end up costing you big-time in the long run. It only takes a little effort and some digging to determine if a company is worth doing business with or should be avoided. The Better Business Bureau is a good place to begin. You will need some basic information about the company in order to investigate. The name of the company as well as the city and state where their home offices are based should be enough. You may want to check with the attorney general’s office and also perform a Google search. Often times, you will find the rants of people who have been ripped off by a certain company online. If you repeatedly find that people have had bad experiences with a particular organization, it is best to look elsewhere.

Consolidate debt like a bulldog

A debt management program is designed to help individuals who have become overwhelmed financially. In many cases, these individuals have gotten behind on payments to their lenders or feel that they might if something is not done. Debt management programs often offer the same services as debt consolidation programs or companies and many people use the terms interchangeably.

Depending on who you work with, a debt management company may be able to help you negotiate lower interest rates on much of your outstanding debt, get late fees you may have accumulated waived, consolidate your debt and assist you with coming up with a payment schedule that works for both you and your creditors. We will discuss how a debt management program can help you get back on track in more depth below.

Debt Management Companies Negotiate Lower Interest Rates: Many people have trouble paying back what they owe and that is often due to the high interest rates that some companies charge, especially credit card companies. If people have missed a payment or paid one of their other creditors late, they may find that the interest rates on their charge cards have increased significantly. It’s no wonder that this happens. Credit card companies are in the business of making money and they are continually coming up with new and “creative” ways to charge their customers more money.

These increased and often arbitrary charges have become such a problem and have sparked so much outrage throughout the country that Congress is currently taking up the issue. In the meanwhile, debt management companies work directly with your creditors (mostly credit card companies) and attempt to negotiate cheaper interest rates on your behalf. Most of the best debt management companies will already have relationships with various credit card lenders and will be able to get their members significantly reduced rates. There will be companies that refuse to drop their rates or will only do so nominally. In those cases, there is little that can be done besides paying what they require.

Debt Management Companies Get Late Fees Waived: Now this won’t always be the case. However, some of your creditors will agree to waive your late fees if they know that you are working with a debt management company. Working with these types of companies shows them that you are serious about getting out of debt and that you are taking steps to responsibly manage what you owe. They understand that late fees can be prohibitive, so they may be willing to waive them. This can save you a lot of money and make it much easier to get back on your feet. Many times, when people start to feel overwhelmed, they simply stop paying. Creditors want to avoid this because they are extremely invested in people paying back what they owe, so they are sometimes willing to work with you.

Debt Management Companies Consolidate Debt: One of the biggest benefits when it comes to debt management programs is their ability to consolidate your debt. This should not be confused with a consolidation loan. Instead, these types of companies will list out everything you owe and then help you get rid of all of your debt in a pre-determined amount of time. In this way, it is not a true consolidation. Your outstanding debt will not be moved to one account, one loan or one credit card. However, you will likely pay the debt management company one check which they will then distribute to all of your creditors.

Debt Management Companies Help You Develop a Payment Schedule: One huge advantage of working with such companies is their ability to help you come up with a payment schedule that will enable you to eventually pay off all of your debt. Most design programs that take between 3-5 years. This means that in a certain amount of time, you should be debt-free. The company will be able to calculate exactly how much you need to pay each month so that this can be accomplished.

A debt management program can have many benefits. These types of companies are able to provide many valuable services. They may be able to help you negotiate lower interest rates, get late fees waived, consolidate debt and develop a repayment schedule that allows you to become debt free in 3-5 years. While many companies are non-profit and either don’t charge anything or only a nominal fee, there are some that will attempt to charge you a good chunk of money. Don’t do business with these companies, simply choose the ones that you think are able to help you get back on track.

Charge into your debt like a bull

So your in debt, don’t worry it happens and is happening to millions of people right now. These are unprecedented and difficult times. Keep your head up, avoid any irrational actions and just keeping hacking away at the debt.  Here are the top five things to do now to get you on the right track.

1. Know your exact situation

Sit down with a pen and paper and find out exactly how much debt and payment obligations you currently have.  Find all your old contracts, bills, and statements so you are not guessing.  Pick up the phone and call your credit card company and loan institutions.  You will need a detailed account of your current liabilities and debts.  Take your time, this should not be rushed.  It is important to know where you currently stand.  Then make a nice spreadsheet so you can track your progress.  The confidence boost of knowing you are making headway and seeing real gains will get you through this process.  The only way to have this is to first have an accurate account of your debt.

2.  Make a plan – organize and prioritize your debt management

Now that you have the organized account of you debts, it’s time to get busy.  Add another column to your spreadsheet called ‘interest rate’. Now go through and enter the current interest for every single debt you have.  The idea is to pay down the highest interest rate debts first because these are the ones that are doing the most damage to you finances and killing your debt management plan.  I personally am a big fan of small, reasonable consolidate loans.  Take a 19% interest rate credit card and transfer it to a 9% rate credit card.  Slowly slowly keep doing this over time and you will be amazed at the results. Trade the higher rates for lower rates and soon the average interest rate you are paying on your debt will be much smaller.  So have a plan.  Keeping organized, making and following a plan is a small price to pay and the result is huge.

3. Curb your spending – make a budget

It’s one thing to say that you need to spend less money, it’s another thing to actually achieve it.  The key to success, is once again organization.  Write everything you buy and how much you spend for each thing down on paper for one month.  Yes I know, what a pain in the hoohoo!  This will only be one month.  You can do almost anything for one month.  When the month is finished, take your valuable data and compile into a legible and readable document or spreadsheet.  You will be  amazed to see a fair amount of  ‘fat’  that can be easily trimmed from you current spending. You can now create a budget.  The key to long term success with a budget is the same as dieting;  think long term.  Don’t make your budget painful and impossible to follow or you will be setting yourself up for a rebound and possible loss of ground.  Make you daily, weekly and monthly budget workable and enjoyable but sensible.  Such small things like buying a coffee thermos and making your coffee at home will save on expensive trips to Starbucks.  You get the idea.

4. Do not add more debt

This one seems obvious, but is a classic cause of further debt. You don’t really need a new car, or to buy a new house.  Get your personal finances in order first before even considering new debt obligations.  We are suckers for all the advertising and actually believe we need these objects to make us happy.  Don’t buy it, more shackles and heavy weight of being under the prison of debt is not going to make anyone happy.

5. Debt collectors – be like a duck

When the debt collectors come knocking or calling, deal with them firmly and calmly.  Let the stress and threats roll of you like water on a ducks back.  If you pay them,  make a deal to get a deletion from your credit report.  Some creditors will agree to delete the account from your credit report if the request comes from a collection agency.  This is a good example of how even when our backs are against the wall, there is still a little room for negotiating.  Speaking of making deals, don’t be afraid to call the credit card companies and banks and ask for a lower rate.  Making a phone call can save tons of money in long term interest fees.

Money often flies away like a bird!

If you have been forced to go to a debt counseling organization for help with your finances, it is important that you learn from the experience. Otherwise, you will simply find yourself back in trouble, perhaps much worse the next time around. The first thing that you need to figure out is how you got behind in the first place.

Next, it will be important to recognize how a good, responsible spending plan can make life easier. A spending plan will help you organize your income and expenses. You will know exactly where each dollar will be going each month. This is very important.

People who are poor financial mangers tend to spend without a plan and end up hoping that they have enough money left over to pay their most important bills, i.e., mortgage, rent, car and food. On the other hand, individuals who are successful at managing their money choose the opposite approach. They pay their fixed expenses first and then put money aside for the non-essentials.

Lastly, the importance of keeping up with your finances and the potential problems that arise from misusing credit is a must-learn lesson for an individual or family who has been forced to go down the path of debt counseling.

Lesson #1: What caused the debt problem: Perhaps the biggest lesson that someone who has gone through debt counseling should learn or figure out is what led them into financial trouble. Does someone in the household have a problem with compulsiveness or perhaps a shopping addiction? Were the financial problems simply related to not keeping good records of what was coming in and what was being spent? Is someone depressed and thus spending money in order to feel better? Is the family attempting to keep up with the “Smiths”?

The reason why figuring out the cause is so important is because nothing will likely change if the underlying issues are not treated. For example, a person who has a shopping addiction may need to get counseling. If he or she does, then that person might stop spending once a financial crisis arises. However, without help, it is likely that these people will resume their old habits when they feel that they are able to. If the problem with spending has to do with simply not keeping good accounts, this can easily be remedied by purchasing budgeting software.

Lesson #2: The importance of a spending plan: People who have been forced to take advantage of debt counseling to get their finances under control should now understand the importance of a spending plan. Unless a person has lost his or her job or has simply taken on more expenses than his or her income can cover, not regularly budgeting is often the culprit.

Without a spending plan in place, it is very easy for your financial situation to become a free-for-all, with each partner attempting to buy what he or she wants before the money runs out. This will become disastrous. Individuals have to come up with a budget and stick to it as much as possible.

Lesson #3: Why tracking your finances and implementing changes immediately will prevent many problems: A budget is not necessarily set in stone. Things happen and circumstances change. You might find that you have not allotted enough money for certain bills or do not need so much money for other things. By tracking your expenses, you can figure this out and make the appropriate changes. You may also experience an increase or decrease in income which may also affect your budget. This way, your budget may become a bit fluid and that’s perfectly fine.

The trouble comes when you don’t recognize or respond to financial changes that may affect your budget. When you don’t take this information into account, you may not know that you need to cut back on some expenditures or that it has now become necessary for someone to pick up more hours at work, get an additional job or even a completely new one.

To avoid this, simply reconcile your accounts every month. Check and see where you have budgeted too much or too little and then make adjustments. Better yet, reconcile as you go along. As soon as you pay a bill, check it against the budget and see if you are now ahead or behind, then make adjustments as needed.