Help with Consumer Debt

Are your bills piling up?
Are your bills piling up?

Are You Trying to Get Out of Debt, Too?

Consumer debt has been a major problem in the United States for decades. People tend to finance more than they can afford and charge up their credit cards to the limit and then fall behind on the payments.

As a result, several people have made lucrative careers from giving consumer debt advice to people who want to deal responsibly with the debts they have created. Gurus like Dave Ramsey, Suze Orman and Clark Howard have had successful radio and TV shows and written several books for consumers which contain advice about how to get back on track with your finances.

Written Budgets

Financial experts like Dave Ramsey strongly suggest written budgets as a method for keeping track of where all your money goes. He suggests that you make a budget at the beginning of each month. Your budget will include your income and expenses for the month and you should have a plan for where every dollar you spend will go for the upcoming month. If your income is sporadic or unpredictable, Ramsey suggests that you start with your lowest expected pay and then plan where any extra money will go for the month. This helps consumers prevent overspending and it helps you plan to put money towards your debt each month.

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Keep Your Spending Records

One of the best ways to monitor where your money is going is to keep a written record of every penny you spend. At the end of each month, look at your record and add up the amount of money you spend on frivolous things, such as going out to eat, entertainment and snacks. Once you have a tangible record of how much you are spending on unnecessary things, you can make some changes to your spending behaviors and start putting some of that money toward any consumer debt that you have.

Make Timely Payments

Late payments will destroy your credit score faster than anything else in your financial history. According to the National Federation of Credit Counseling, late payments, partial payments and skipped payments show that you are a bigger risk to future lenders. As a result, your credit score drops considerably and you could be charged higher interest rates and given lower credit limits if you get approved for future loans.

Avoid Credit Consolidation Services

According to Clark Howard, credit consolidation companies are a bad idea if you have consumer debt. These companies typically charge consumers an upfront fee in order to help you with your credit problems. Instead of paying the consolidation company those fees, you could be putting that money towards your debt to pay it off faster. He does, however, suggest using the Consumer Credit Counseling Service, or CCCS, because the company does not charge any fees for credit counseling.

Cash is king.
Cash is king.

Pay with Cash

According to Suze Orman, using cash is the best way to avoid going deeper into consumer debt and getting out of the debt you are already in. In addition to that, credit card companies are increasing interest rates and fees which is going to put your even deeper in debt even if you have stopped using your credit cards. Her "Back to Cash" movement encourages consumers to stop using credit and pay cash for everyday things.

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