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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.

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

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.

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.

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.

We may be in for a bit of turmoil. The  credit card  issuers who for years, did pretty much whatever they wanted without moderation are not too excited about the new upcoming changes. They have warned, that if the bills go through, we will all regret it. We have about nine months before these laws take hold, so until then it’s the wild west.

The benchmark prime rate which all others are based upon has fallen.  The last year has seen a record drop of 2% to 3.25%. So one would naturally assume that credit card rates have also fallen.  Wrong. Over the last year, the rate for credit cards has went up almost 1%. Now that the credit companies and banks are soon to get squeezed by Obamas new laws,  expect them rates to go even higher.  The big banks are under a lot of pressure to make a profit and stay afloat themselves,  so they are not going to be cutting consumers any slack.

Banking and Credit card  fees

The big banks and credit card issuers make a ton of money from fees. Late fees, balance transfer fees, foreign transaction fees, cash advance and ATM fees, yearly fees, and of course the “just because we feel like it fees. Watch your billing statements carefully. Compare them with credit card statements from past months and years. You will likely see some new and/or increased fees added. As the credit crunch and recession continue, the big banks make more and more money from adding on fees. So be alert, and read the fine print. A few of my cards seem to be changing the terms almost daily and I don’t think this is a rare occurance.

Rewards are dwindeling

You favorite cashback reward,  or airline miles card may soon be giving you the finger. The intense competition we have seen in past years for customers seems to have dissipated and the banks all decided in tandem to tighten the screws. The days of receiving a ton of zero percent interest rate offers in your mailbox are also going by the wayside.  Once again check the fine print. Read your constantly updated terms and be informed or you may be in for a nasty surprise when you find out that you no longer receive as many miles or rewards as you previously did. The whole industry is in turmoil after the big bank bailouts and there are likely more changes to come as banks figure out ways to recover from staggering losses and upcoming credit reform laws.

The best plan of action is education and comparison. Compare as many different plans and offers as you can find and don’t be shy to drop one and pick up another. The phone is also your friend, use it. Don’t be shy about calling up your lenders and asking about fees and interest rates on your account. They will still often drop or reduce fees or interest rate hikes. They make a huge amount of money because of the average consumers complacency and laziness or fear of dealing with such matters.  When they try to pull a shady maneuver, call them on it.  The worst thing you can do is sit idly by and watch your hard earned money go towards another huge bonus for the bank CEO’s and executive staff.

Yes, I know, it sounds crazy and against all that banks believe in, but sometimes credit card companies and banks will actually forgive a portion of a consumers outstanding debt. The big banks know that in some situations ‘a little’ is better than ‘none’. In extreme cases, banks have forgiven up to 70% of credit card debt in exchange for complete payment of the remaining 30%. Nothing is static in these volatile times we are living in. Once again, calling and discussing your options directly with the banks can be beneficial.

Is Credit card debt forgiveness good idea?

Sounds wonderful doesn’t it? The downside is that credit card debt is never forgotten. You can consolidate credit card debt and negotiate for forgiveness on some of it, but banks will surely make a note of this on your credit report. This type of debt consolidation or debt reduction will always be reported as non-payment and will of course stay on your personal credit file for many years.

Who can consolidate debt from credit cards using loan modification?

For the most part, this drastic plan to consolidate debt and reduce liabilities is only for those who have no income and have not paid their bills in many months. If it looks like you can still make some payments then banks will likely want you to just keep paying and milk your account for long term interest charges and fees. These loan modification agreements are in the banks best interest, not yours, so they will pick and choose when to negotiate. Credit counselors can help assist you in these credit card debt negotiations but beware of huge fees and percentages added to the total. You might be surprised at how well you can negotiate your own loan modification program and the experience will teach you a lot about the whole process which can help you to consolidate debt in the future.

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.

So what exactly do the new credit card reform laws mean to me?

For the short term, they mean more shenanigans and tomfoolery from the big banks and credit card companies.  The heavies in the credit card industry are not happy about these new laws.  The laws don’t take effect for some time and until then, you can bet credit card issuers will do everything they can to make more money and improve the bottom line.  With the big bank bailouts and overall credit crunch that comes with a recession, there is a huge amount of bad debt on the books.  Tons of people missing payments and loans going unpaid.  Now we add the further restrictions of a wide ranging group of new credit card laws and the banks are getting nervous.  We all know what direction the brown stuff flows,  so its an easy guess to know who is going to pay more.  We are.  The next 8-12 months will be full of fees, interest rate hikes, and credit limit chopping as the big credit card companies scramble in the remaining days of wild west lending practices.

Credit card limits and perks

One obvious way the big boys will reduce exposure to bad debt is by reducing credit card limits.  The people who have plenty of money, or a steady job and good money management skills will not be affected too much.  The people who for whatever reason make a late payment once or twice, or run up balances too quickly, or set off any of the unknown and known  ‘flags’  will be immediately put into the ‘high risk group’ and may see their credit limits drop without warning.  Credit card companies are on edge,  nervous, and quick to excite.  It doesn’t take much these days to get your name thrown into a pile of other questionable credit consumers.  There have even been some reports of people with excellent credit who pay their balances each month  getting credit limits axed.   So if they see you as a risk, or as safe but not making them much money, you might be saying ‘bye-bye’  to your current high credit limits.

The days of getting flooded with zero percent interest credit card offers and other perks have been on the way out. Your favorite mileage card or ‘cash-back’ card could be changing the policy any moment.  In fact, many cards have been changing policies almost weekly.  Reducing, or completely doing away with the great perks and advantages like earning miles.  The whole credit card and banking industry is in crisis mode so expect this to be a tumultuous time.

Watch your Banking and Credit card fees – be alert

It is no big secret that banks make money from fees.  They are not just giving us money to use because they care so much about us.  These fees for the last few years have become quite nasty and downright sneaky.  The golden rule is “Watch them like a hawk”.  This of course, is easier said than done.  Who has the time to read the constantly changing policy statements and dig out the magnifying glass and to  separate the interest charges from the add on fees?  Not me, and likely not you either.  You just do your best, and always be watching for changes.  When the new laws take effect this process should become much easier.

I will be going  into more detail about what exactly is in the new credit card laws over the next few weeks and months, but for now here is a sample of the changes:

• Protection from quick,  sudden interest charges,  and from increasing the interest rate in an accounts first year or on already existing balances.

• Banning the sneaky  “two-cycle billing” method.  Basically if you completely pay your balance one month, but not the next month, the crooks calculate the interest based upon both months.

• Give consumers more time to pay the credit cards.  Statements must be received 21 days before the payment is due.

• Ban another sneaky practice of applying payments to lower interest rate charges first while the higher interest rate balance goes untouched.

• Require a 45 day advance notice of upcoming interest rate increases.

So as you can see, it’s all a nice step in the right direction and it will eventually improve in the consumers favor, but until this happens you need to stay vigilant and alert.  There are a few things you can do in the meantime.  First of all, don’t be shy.  Pick up the phone and call the credit card company if you see any strange fees,  interest hikes,  or credit limit changes.  Complacency is the banks best friend. Most people never question or call them and the ones who do are often rewarded with lower rates and better terms.  If this doesn’t  work,  then don’t  hesitate to move your  balances and accounts to another lender.  As consumers, we have the power to shop around and take our business elsewhere.  I know when I was working fervently to get out of deep credit card debt I changed credit cards all the time and always moved from a higher rate to a lower rate.  The worst thing you can do is to just watch them take advantage and collect huge fees, and charges.

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.