After the Negotiation Process
Once the debt management group negotiates terms, they will consolidate all your payments into one simple remittance to which they’ll include the charge for their services. All you’ll need to do then is pay them monthly and they’ll pay your creditors. If you’ve reached the point that you believe the only alternative out of your financial situation is to file bankruptcy, then considering the services of one of the debt management groups online is a far better alternative.

Make Sure your Future Doesn’t Include Bankruptcy
Therefore, avoid bankruptcy if you can and go to a debt management group for help. A bankruptcy can stay on your credit report for ten years and makes it hard for you to obtain additional credit, get a job, buy an automobile or purchase or rent a house or an apartment. You may be released from your debt obligations with a bankruptcy but it doesn’t provide you with any security as far as your future financial plans are concerned.

Stay Focused on your Goal
Make it a priority then to stay focused on paying off the amounts you owe and saving for the future. A debt management company can provide you with tips to increase your credit score as well as show you the proper way to save or budget your money. For example, by using the services of such a company, you’ll become better attuned to tracking your daily expenses and planning for unanticipated expenses. With only one convenient monthly payment to worry about with respect to paying your bills, you can save and pay your bills with a lot less stress and hassle too.

Organizing your Savings and Expenses
Therefore, debt relief firms can show you how to balance your assets and liabilities so you don’t fall behind in your payments. Assets include income, savings accounts, stocks and bonds, a house and any retirement plans. Liabilities represent such things as balances on credit cards, mortgage notes, car loans, medical expenses and student loans.

A Positive Step
Once you discover what you have in the way of assets and liabilities, you can learn to organize your finances accordingly. The key to saving and reducing debt is learning to budget and taking the steps necessary to eliminate or reduce liabilities. Take the first step then and contact one of the debt management groups online today. Make it your objective to improve your finances and achieve your savings goals.

Shopping Do’s

• Use a shopping list  – The best way to avoid overspending is to plan your purchases, particularly at the grocery store. Go with a list and stick to it. Don’t add extra items to your cart.
• Comparison shop – For big purchases in particular be sure to spend some time and find the best deal. Every dollar saved is one that can be spent on paying down credit card debt.
• Use coupons – With some advance planning and a bit of organization you can save a bundle each month at the grocery store. Using coupons is a great way to rack up the savings and spend less every time you buy groceries.
• Have a waiting period – If you see something you love and feel you just can’t do without, don’t buy it right away. Make yourself wait a week. During that week, ask yourself if it is something you really need or if being out of debt is more important.
• Send in rebates – If you make a purchase that has a mail in rebate, be sure to send in the rebate immediately. Manufacturers count on a significant number of rebates going unclaimed. Do not be one of the consumers who doesn’t collect.
• Buy in season – At the grocery store, purchase fruits and vegetables that are currently in season. For example, avoid buying imported strawberries in December.

Shopping Dont’s

• Don’t use credit cards for purchases – If you’re trying to get out of debt, you have to stop using your credit cards. Only use what is in your wallet or in your checking account to pay for new purchases.
• Emotional Shopping – Some people use shopping as a form of therapy. It’s probably much less expensive to see a therapist! If you’re in an emotionally upset frame of mind, find another activity instead of shopping. Talk to a friend, go for a walk, play with your children or pets. Extra debt can just add to emotional distress and will contribute to a vicious circle.
• Shopping when hungry – Don’t go to the supermarket if you are hungry. Plan your shopping trip for a time just after a meal.
• Don’t eat out – Homemade food is healthier and costs less. It takes a bit more time to prepare but it will significantly help your budget and your waistline.

Reducing debt is a difficult thing to do. It takes dedication and a lot of planning to make the right decisions. However, it can be done. Use a few of our shopping suggestions to whittle down your debt a little each month. Every place you can save money will improve your bottom line over the long run.

Create a Payment Plan for Yourself
Any time you approach a task that seems difficult, it’s best to make a plan. The more detailed the plan the more likely it is to succeed. When you create your credit card plan, make sure that what you come up with is something you can live with for a long period of time. Depending on your level of debt it can take years to pay off balances and you don’t want to get discouraged. There are two main ways to approach paying down credit card debt.

Note: For either method, first determine the total amount you can pay toward your credit cards each month. This should include all the minimum payments plus the extra that you can apply. In addition to this amount, make yourself a goal of finding an extra $25 a month to add to your getting out of debt project.

• Method 1: Pay down by interest rate. Make a list of all of your debts including minimum payment amounts, balances and interest rates. Put your debts in order based on interest rate with the highest interest rate card listed first. Pay your minimum payments each month on every card except the first card. On the first card pay the minimum plus as much extra as you can afford to send each month. Work on that high interest rate card until it’s paid off, then begin sending the same extra amount to the 2nd card on the list. In order for this method to work, you need to be sure to use all the money you had been paying to the first card (including the minimum amount) when you start paying on the 2nd card.
• Method 2: Pay down by balance. Using the same list you created for method 1, this time sort the list with the lowest balance at the top. Each month send all your bills the minimum payments except the account at the top of the list. The top account gets the minimum plus all the extra you have to send. Once the first account is paid off, proceed to the second account.

While both of these methods are effective, it’s for different reasons. Method 1, paying off based on interest rate, will by far save you more money in the long run because you pay less interest. However, most of the time the higher interest rate cards have the higher payment amounts and it can just feel like it takes forever to make any progress. Method 2, paying off by balance can help people have a sense of accomplishment because accounts will be paid off quickly. However, the higher interest rate cards may end up getting paid off last which means more money was spent in the long run.

Whichever method you decide to use, put it into practice right away. It will be a bit of work but you’ll be happy you did it in the end.

Pay down technique #1: Stop using your credit cards. In order to make any progress at all toward getting out of credit card debt, you have to stop adding to the balance. The easiest way to do so is to cut up the cards. Some folks have a hard time doing this because they rely on the cards for emergencies. If this is the case for you, then at least pull the card out of your wallet or purse and store it in a difficult to reach location in your home. The cupboard above the refrigerator is a good place.

Pay down technique #2: Find extra cash for debt. In order to make progress, you’ll need to identify ways of paying more than the minimums on credit cards each month. Instead of buying coffee out, make your own coffee at home and take it with you in a travel mug. This tip alone can save thousands of people $90 a month – and that’s if they only buy one drip coffee a day! Think of all the extras that you could do without – then use the money toward your debt instead. Any time you make a decision not spend money on unnecessary things, put that amount aside for the credit card. If you have to, physically put the cash aside. At the end of the month count the money that you’ve successfully saved. It’s amazing how much money you can find in your existing budget if you put your mind to it.

Pay down technique #4: Get a second job. If, even after eliminating unnecessary expenses, still find you’re unable to come up with enough to pay down your credit cards fast enough, it’s time to find more income. It can be worth it to take on a second job for a short period of time. Look for temporary positions or seasonal help positions. Another way to go is to brainstorm all of the types of work you can do and then check to see if private parties need that kind of work. Craigslist can be a great way to find casual jobs. If you’re great at landscaping, moving, cleaning or other domestic or labor intensive work you’ll likely find a ton of part-time or one-time jobs.

Pay down technique #5: Pay your credit cards on time. It’s essential to make timely payments. A missed or late payment can cause your interest rate to skyrocket and put a huge dent in your ability to pay down your credit card. Late fees can also quickly add up. A $35 late fee can be equal to or more than the interest on your balance in a given month.

In Part 2 of this series we’ll give you information about how to organize your credit card accounts to get the most bang for your buck when you go to use your extra money to pay down balances more quickly.

Pros of DIY Debt Settlement

• Save the monthly expense of working with a debt settlement company.
• Maintain control over your financial situation – no relying on a 3rd party to get things done.
• Avoid the hassle of choosing a reputable debt settlement company.

Cons of DIY Debt Settlement

• Many individuals find the process of negotiating their own debt settlements to be overwhelming and time consuming.
• Most creditors will say no at first – knowing how to handle the initial rejection takes time and research.
• Without a third party to guide you and keep you on track, it’s easy to fall back into old spending habits.
• You still have to make and answer calls from your creditors and do all the negotiating yourself.

Interviewing a Debt Settlement Company
If you decide you don’t want to go the DIY route, be sure to do some due diligence before signing on the dotted line with a debt settlement company. At the very minimum you should:

• Ask for, and check, at least 3 references.
• Check the companies record with the State Attorney General and the Better Business Bureau.
• Do an internet search for reviews about the particular company you’re considering.
• Ask what their cancellation policy is.
• Find out how they make their money. Is there a monthly fee or a big fee to pay up front? What if you have to cancel part way through the program? Are you still liable for those fees?

Once you’ve set up your agreement, be sure to call and verify the plan with your creditors directly. Make sure you review your statements and that the payments you’re making are being credited to your account. Just because you’re working with a debt settlement company doesn’t mean that you should take a back seat in the process.

Debt settlement companies can be a huge help to people who need to negotiate their unsecured loans. Whether you prefer to handle the settlement yourself or want to find a debt settlement company, you’ll still save money in the long run if you’re consistent and dedicated. If you decide to hire a company, the trick is to find the right organization and maintain an active role in your settlement. Wanting to get out of debt is the first step – getting out of debt will take hard work and perseverance no matter which route you decide to go. The most important thing is deciding on a path and then sticking with it.

Weekly Expenses
You may not have weekly expenses depending on how you prefer to budget your money. If you do like to divide it out weekly, here are some of your likely categories:

• Groceries
• Gas or Bus Fare
• Parking
• Day Care or Babysitters
• Coffee money

Monthly Expenses
In this category are all the expenses that you pay monthly.

• Mortgage or rent payment
• Car loans or leases
• Child support
• Credit card payments
• Installment loan payments
• Internet
• Phone
• Subscription fees (Netflix, Audible, etc.)
• Auto insurance
• Life insurance
• Health insurance
• Garbage/Sewer/Water
• Gas and Electricity
• Homeowners association fees
• Private school tuition
• Landscaping or yard maintenance
• Clothing and shoes
• Savings
• Charity or Giving fund

Annual or Semi-Annual Expenses

• Property taxes
• Vehicle tabs or licenses
• Professional services like tax preparation

Unexpected Expenses
It’s a good idea to save a little each month in the event that the unexpected occurs. Try to estimate the amount you spend on the following each year, then put aside a proportionate amount each month.

• Medical expenses – Medical, dental, lab, chiropractic, massage, prescriptions
• Home repairs – HVAC, plumbing, yard
• Vehicle repairs

Discretionary Spending
The above listed categories are the “essentials”. Nearly every thing else is discretionary. This would include items like:

• Books
• Toys
• Travel
• Eating out
• Gym and other memberships
• CD’s or .mp3′s
• Impulse purchases

Use this list as a template to create your own monthly expenses list. Then keep track for a month or two of how much you spend in each category. Once you have a good idea of where you’re spending it will be easier to identify places you can cut back. Could you mow your own lawn and cut back to buying coffee out just once a week? If so, you could save $100 a month that could be used toward a credit card debt. How much are you spending in eating out? Many people report that they spend more in restaurants than they do at the grocery store. While it is more time consuming to eat at home it is a big place you can look to save money – and it’s better for your health as well.

Another way to save money is to make sure you’re using everything that you’re paying for. Are there any subscriptions or memberships that you only rarely use? Have you examined your auto and homeowners insurance policies lately to make sure you’re only paying for coverage you need? Are you overpaying for your cell phone? By examining every item on your expense list you can find hidden dollars in nearly every category. Use this extra savings to make a huge dent in your debt.

Examining your expenses isn’t the greatest feeling in the world – but getting out of debt is. Take some time to identify your expenses and how to cut them and you’ll be on the road to living debt free in no time.

Debt Reduction Tip #1: Stop Buying on Credit
If you want to get out of debt, the first thing you need to do is put a freeze on any spending that requires a credit card or borrowed money. You want to be getting out of debt, not getting more into it.  Take all of your cards out of your wallet and put them in a drawer for safe keeping. Don’t be tempted to use them for any reason.

Debt Reduction Tip #2: Use the Cash Method
Many people find it helpful to use cash to budget. Each month, determine how much you’re going to spend in various categories. For each category, create an envelope. Sample categories might include: groceries, gas, dining out, entertainment, car payments, insurance, etc. Put your budgeted amount in cash into each envelope at the beginning of each month. When the cash runs out of a particular envelope – that’s it, no more spending in that category for the rest of the month. Run out of grocery money a week before the end of the month and you’ll learn how to eat with what you’ve got in the pantry. Some people use a modified version of this method where they use cash in envelopes only for variable expenses like food and gas. Other expenses, like car payments and insurance stay in the checking account where they can be paid via automatic payments.

Debt Reduction Tip #3: Pay All Credit Cards on Time
Late fees for most credit cards are significant. One late fee can even end up being more than your entire interest payment. Additionally, late payments can cause your card to raise the interest rate. Do everything you can to make at least the minimum monthly payment on time. Many banks and credit cards have automatic payment options. Look to see if that is an option for your cards and sign up. That way, your monthly payment will always be made on time whether you remember to do it or not.

Debt Reduction Tip #4: Increase Income
One of the fastest ways to get out of debt is to increase the amount you can pay toward credit cards each month. If you have to, consider getting a second job – at least for awhile. Use all your extra earnings to pound down the amounts you owe. Start with the cards that charge the highest interest first and pay only on that card until it is paid off. Then move to the next highest card and so forth. Set yourself a short term goal. Even if you can only manage a second job for a few months you can make a sizable dent in your debt over that period of time.

By following the 4 steps we’ve outlined, you’ll find that you can quickly make progress on your debt situation. Over time you can eliminate payments and get some relief in your monthly budget. While it will be hard work, the results will be well worth it.

Take Action
What do we do first? Well we can’t plan to make any improvement if we don’t obtain a copy of our credit report first. Therefore, once you decide that you’re sick of your current credit situation you’ll need to secure your report from each of the three credit bureaus or Equifax, Trans Union and Experian to review. After looking at them, you’ll need to assess where there are errors and immediately correct them. This can be done easily online. Next, you’ll need to look at your overall debt. The best approach here for reducing your indebtedness is to pay off your high interest credit cards first as paying the high interest month after month will only result in keeping you behind in your budget. Make a vow to remit your payments on all your obligations on a timely basis. If you have payments that are hard to handle either consolidate your debts or make arrangements with the individual collectors for special payment arrangements.

Learn to Manage your Money
If your wish to restore credit levels to a manageable level you must learn to be aware of your cash flow and plan accordingly. You can seek credit restoration services but when it comes to your own delinquencies with respect to your accounts, sometimes it’s best to take the bull by the horn and fix the situation yourself. That way you can learn how to better spend your money and save for future expenditures.

Resolve to Save
To restore your credit once and for all, you must proceed along a path of careful spending and establish a savings plan. No credit restoration service can help you do this. You have to learn to do it yourself. Therefore, make a resolution today to change the way you handle your money. Give yourself the opportunity to climb out of the rut that leads to financial obscurity and make a pledge to clear the way for the financial freedom you’ll ultimately want to achieve.

Review your Report on a Regular Basis
One study showed that close to 80% of all credit reports have errors on them so it’s essential that you monitor your report on a fairly regular basis once you get into the habit of making your payments on time and you’ve reduced your debt to a certain degree. Keeping on top of your report will help you stay in control of how you spend and save. You work far too hard to do otherwise. Make it a priority so you can maintain good habits now and in the future with respect to your spending.

Do-it-Yourself Credit Repair vs. Hiring a Service
There are a number of benefits if you undertake to restore credit mistakes yourself or choose to rely on credit restoration services to restore your credit. If you plan to clear your credit report yourself, you can do so at a substantially lower cost than you can by using a credit restoration service. However, if you want to secure the services of people who are professionals in the credit restoration business, then you’re not exactly wasting your money by hiring one of these services to help you out.

If you want to save a substantial amount of time, then probably turning to a credit restoration service to assist you is a feasible plan. Of course, if you restore your credit yourself, you’ll be able to complete each step of the process in the way you want it to be specifically handled. Still, allowing experts in the credit repair field to restore your credit can be likened to having a plumber repair your plumbing versus doing it yourself. Looking at it this way makes one find the logic of using a credit restoration service to repair their credit. If you can trust the company you’re working with, they more than likely will repair your credit in a short span time and provide the service without the hassles that can exist when your do it on your own.

Do Your Research
By researching the variety of companies online that provide credit repair, you can better decide which company will be the most helpful in assisting you in restoring your credit. To have your credit report marred by fraudulent activity or unexplained inaccuracies can be emotional. A credit repair company can relieve the stress that this type of situation can present to anyone who’s been a victim of this type of activity.

Stay Committed
Whether you opt to have your credit repaired by experts or repair your credit by doing it yourself, you will gain an education in the process. Peruse the Internet for the available choices. You can gain advice online or save time by having someone clean up your report. Whichever way you choose, it will be an improvement and greatly reduce the stress of having to deal with such mistakes. It takes some time before you see the results of your efforts but it doesn’t matter as long as you stay focused and meet your objective.

So, whether you restore your credit yourself or choose a professional to handle the task, keep current on what your credit report says. By wiping the slate clean from any inaccuracies you’ll benefit in the long run as well as provide a better lifestyle for you and your family.

(1) Credit card debt relief programs are designed to reduce a consumer’s debt by negotiating down the amounts owed and consolidating them into one easy payment.

Answer: True. These kinds of programs are solutions for anyone who is in over his head with respect to his payments and needs to manage his debt so it can be paid off more easily. All of your debt payments will be consolidated into one monthly payment that you make to the debt relief company. There may be a monthly fee you will pay for their service as well.

(2)    Debt programs that offer financial relief provide counseling services. However, counseling can show up as a negative mark on your credit report.

Answer: True. Depending on the program, your accounts may show on your credit report as being in a counseling program and may significantly impact your credit score. Be prepared for a few years of poor credit while you take steps to get your credit back on track. That said, the amount of time your credit will be impacted is much shorter than the 10 year black mark that bankruptcy can cause.

(3)    Financial counselors at debt management companies can reduce your debt amount by as much as 50%.

Answer: True. Some companies, such as Freedom Debt Relief or National Debt Relief make advertising claims to this effect. Contact either one online to obtain an estimate. They will be able to evaluate your particular situation and give you a precise amount.

(4)    When you go online and sign up with one of the financial management companies, such as Debt Relief of America, you must fill out an extensive form with respect to what you owe before you talk to one of the counselors.

Answer: False. When you find a consumer debt relief company online that you believe can help you, simply fill out a short form listing your basic information and your amount of current debt.  The company will follow up with an estimate of how much they can reduce your debt.

(5)    Debt counselors normally negotiate down your debt by reducing the APR on your loan amount, asking creditors lengthen the amount of time or by writing off a portion of the loan.

Answer: True. Counselors can help you with the process by talking to your creditors and striking some type of compromise so you can more easily pay off your debt. They can reduce the principle, the interest rate and even remove late fees and over the credit limit fees.

So, how’d you do? Do you understand the process? Or, are you just good at guessing? In any event, if you find your debt a little arduous to handle, check out your options online. You’re sure to find a company that can help make the financial side of life a little less difficult.