Many of us are finding it harder to make ends meet in today’s economy. We start falling back on our credit cards to maintain a lifestyle to which we are all accustomed instead of cutting back and just using cash. But then we find ourselves struggling to dig our way out of the black hold of debt that we have created for ourselves!

Eventually you will find yourself DONE with this lifestyle. You are ready to step up to the plate to rid yourself of this financial mess. You are ready to start enjoying life again without the stress of wondering if you can afford it. You can try to hammer down the debts yourself. But remember that you are much more forgiving of yourself than your creditors. There will always be a “just this once” moment to use a credit card. In order to truly discipline yourself and rid yourself of debt once and for all, it may be beneficial for you to consider a debt consolidation or debt management company.

The most important thing when looking for a debt consolidation quote is to do extensive research. There are many companies out there that will charge high fees and put you in a worse position than you first started. The best way to successfully tackle this debt is to go through a non-profit debt management organization. They have nothing to gain from you as their client. They are specifically there to help you get out of your debt situation.

Get a list of good non-profit debt management organizations and make some calls. Find out if there are any fees involved, and how much they are. These organizations will usually charge a fee, but it is minimal.

Preparation for Debt  Consolidation

Prior to your first meeting with a debt management representative, you will need to do some homework. Gather all of your debts, secured and unsecured, and prepare a rough budget. The budget does not have to be detailed. This should just consist of a list of typical monthly bills (mortgage/rent, utilities, groceries, etc.). Your debt management representative should help you create a “final” budget. The budget is the most important aspect to debt consolidation. By creating a budget, you know how much you need for your necessities and how much you have left over to pay down your debts. Living expenses should always come first.

Once your budget is established, you know how much money you have left at the end of each month to tackle your debts. This amount will typically be your lump sum monthly payment to the debt management company. They will then disburse your payments accordingly to all of your enrolled accounts.

Gather all of your credit cards. Take note of the balances owed, minimum payments required, and interest rates on each. Again, your representative can help you. An important thing to note: Once you enter a debt management plan, you CANNOT use any form of credit. The accounts you enter into the program will be closed off for your use. Furthermore, if you choose to open new accounts, the companies of the enrolled accounts may choose to terminate any agreement set by your debt counselor.

With your budget in-hand and list of debts, your debt management counselor will make calls to commence negotiations for your accounts. Credit companies typically set a lower interest rate with a specified minimum payment when dealing with debt management companies. You (or your debt management counselor) will start to receive letters from these creditors explaining the terms of the agreement set forth to pay down their account. You will need to turn in all of your credit statements to your counselor for the first few months. After these first few months, you will start to see a difference in your balances. Typically, the lower balances are paid off first. Once the lowest is paid off, the amount that was paid to them is added to the payments made to the account with the next lowest balance to help expedite that payoff. Depending on the level of debt entered into the program, it can take anywhere from 24 to 60 months to complete payments.

Another important item to note is if you choose to pay extra to any one account, send that payment through your debt management organization. Make sure you specify to your counselor how you want that payment disbursed. If you pay the creditors directly, they can deem you capable of paying your own debts and terminate the agreement with the debt management organization.

Best of all, sit back and relax. Yes, it will be harder. You will have to actually live on what you make rather than falling back on credit cards. But soon they will all be paid off and you can finally reap the benefits of all your hard work…with cash!