Counseling Debt Reduction

Run as fast as you can away from ‘credit counselors.’ It’s a business and they are there to make money not to save you money. You can do exactly the same thing they can do for you and you can apply the money they would charge you to reducing your debt.

My suggestion is to cut up all of your credit cards except for one for emergencies. Call the people that you owe money to and see if their credit manager will help you by lowering the interest rate or waiving some of the charges. If that doesn’t work and you can qualify for a zero rate or reduced rate credit card then yeah, go ahead and consolidate. But – don’t keep that card. Cut it up. Use it only for your outstanding debt. Cancel all the other cards.

Enlist the help of a trusted friend or family member to be your mentor to get you out of debt. Use them like an AA partner. Whenever you feel the need to ‘charge’ call that friend and talk about the purchase you feel you need to make. Talking it over will give you time to realize that you probably don’t need those new shoes or whatevers. Get a part time job and use the income from that job only for the debt reduction payments.

Alternatives: If you own a home you can look at a home equity loan. The interest is generally tax deductible. You can consider asking a parent or grandparent for a loan but make sure you give them a note and repay it promptly if they grant you a loan. Most banks don’t offer ‘consolidation’ loans – and if they do then the interest rate will be close to credit card rates so it’s not that advantageous.

$2,000.00 is not a small amount but it’s doable. Good for you for recognizing that you need to pay it off. It’s a painful process but you can do it!