Debt counseling is a good resource for those who are struggling to get out of debt. Unfortunately, few debt counseling services are free, and many companies are more concerned with taking your money than helping you get off debt.
Before you turn to a paid service, consider using one of these four methods which are just as effective and won’t cost you anything.
1. Consolidate your debt
Imagine your income like a pie; the more slices you have to cut, the less everyone has. Instead of paying multiple creditors each month, consider debt consolidation options. You can get a debt consolidation loan or transfer the balances to the credit card with the lowest interest rate. By consolidating your debt, you will not only have fewer payments to make, but you will also reduce the number of different interest rates that your debt is affected by.
2. Keep your creditors informed
One of the biggest mistakes people make is pretending they’re not in crisis. Having debt over your head reduces the financial freedom you have and the choices you can make about your job, your life situation, your hobbies, etc. It can be embarrassing or shameful to admit that you need help, but reach out to your creditors and let them know that your problem will be better for your situation than avoiding their calls and letters.
Contact their debt settlement department and explain what’s going on. You might have negative feelings about making this call, but those in charge of these services deal with issues like yours every day, so they will know what options are available to you. You may be able to reduce your payments, lower your interest rate, or even achieve a lump sum settlement that wipes out some of your unpaid debt. If you don’t ask, you won’t know what avenues are available, so be proactive and ask for help.
3. Use a free credit coaching service
Most debt settlement counseling companies will charge you a fee for their services. Since you are probably contacting them because there is not enough money for everyone, having to pay another company could make the situation worse.
Before contacting a paid company, consider using free credit coaching services. Many nonprofits offer credit counseling programs to help you get out of debt and work with people, regardless of your income or financial health. Find a local nonprofit organization specializing in credit counseling or inquire in your community. Some religious institutions will also provide this service to their worshipers, so contact your place of worship to see what they can offer in terms of debt coaching.
4. Reassess your budget
Getting out of debt means having to change the way you let money in and out of your life. If you’ve never used a budget before, now is a great time to start. Start by tracking every penny that leaves your bank account and where it goes. You can create a spreadsheet or even just a little notebook that never leaves you. Once you notice where your money is going, you will have a better idea of ââwhere those money âleaksâ are that are keeping you from making ends meet. You can then decide to cut back on your expenses, if possible, or find ways to earn additional income.
The bottom line
Whichever method you choose, you will need to stop avoiding the problem and face your problem head-on to free yourself from your debt. Take the time to sit down and understand the full extent of your debt situation so that you can create the best plan possible. Use any of the methods above to get started and add as you improve in developing your new drinking habits. Keep in mind that you didn’t find yourself in this situation quickly, so it may take some time to get out of debt. Forgive yourself, take it day by day, and focus on making better financial decisions today.
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