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Options for Debt Management and Reduction

Do you ever feel like you are at the bottom of a well and you don't know how you are going to climb your way out? Feel like you need a "Get out of debt free" card? If you are in debt, you are not alone. There are many life factors that can cause consumers to lose control of their financial situations and end up in debt. The good news is that help is available. No matter what your current financial situation is, there is always a way to improve it.

Professional agencies offer debt counseling and debt management programs to guide individuals on the path to financial control and achievement. Debt counseling agencies agree that the first step to managing and improving your debt situation is to know where you stand. If you stick to your plan for debt management, you can make it work for you, and can be on your way to a debt-free life.

Assess your Debt Situation

In order to know how you can start tackling your debt situation and begin achieving financial success, you first need to know where you stand. It is imperative that you be honest about how you are spending your money and on what types of purchases. Ask yourself questions like these:

1. I always pay the rent/mortgage in a timely manner (True or False)
2. I am always able to pay more than the minimum on my credit cards (True or False)
3. I now use cash for items I used to buy with credit (True or False)
4. Less than 15% of my income is going toward credit card payments (True or False)
5. I rarely (if ever) use my savings to pay my bills (True of False)

If you answered "False" to one or more of these questions, you are probably going to have to create a new plan for managing your debt. Part of assessing your current debt situation is to understand the causes of your debt. How did you get into this situation in the first place? Identifying the source of your financial problems is the first step to correcting them. Do any of the following apply to your situation?

• Do your expenses now outweigh your level of income?
• Have you recently gone through a divorce?
• Do you tend to spend excessively on items that you don't need?
• Have you gone through a period of unemployment?
• Do you have a behavioral issue that contributes to your debt (such as gambling)?

Although these are only a few of the main causes of debt, they can heavily contribute to an individual's financial situation. Many have sought the services of a debt counseling agency or have signed up for a Debt Management Program. This way, he or she becomes more educated about options and gets some sense of structure and guidance.

What Can You Do To Improve Your Debt Situation Now?

Once you have determined the contributing causes of your debt and have assessed where you currently stand, it is then time to start doing something to improve it!

Control, Control, Control

As we all know, it can be all too easy to swipe that credit card at the checkout. Somehow, it just doesn't seem as painful as paying for something in cash. That is, until you get your credit card statement in the mail. There are many ways that you can train yourself to manage your debt more wisely. Debt counseling professionals offer these tried and true suggestions to help get your spending under control:

• Always shop with a prepared list
• Take only enough money for the items on your list
• Always show your family all of your purchases (Hiding them means you feel guilty about what you have spent)
• Avoid shopping with people who encourage you to spend

Create a Household Budget - and Stick to It!

There is no excuse for not having a household budget. You don't necessarily need any fancy budgetary software - a good spreadsheet is all you need for effective debt management.

Divide up your monthly expenses:

• Fixed (Dollar amounts stay the same from month to month)
• Variable (Dollar amounts vary from month to month)
• Periodic (Do not occur monthly - only from time to time)

Set goals for allocating your household budget properly. For instance, about half of your income should be allocated toward housing and food (20% and 30% respectively). It is a good rule of thumb to not apply more than 15% of your income toward personal debt, and always try to apply at least 10% of your income to savings. The rest of your income (25%) should be divided up accordingly among areas such as transportation, utilities, insurance, clothing, health, and personal care.

Although debt management can be challenging, it is important to constantly remind yourself of the big picture. Think of the long-term goals you would like to achieve. If you need help, you can always seek the services of a debt counseling agency to keep you on track.

Everyday Ways to Save

Cutting corners here and there can really add up to significant savings - the key is to do it regularly and make it a part of your daily debt management routine.

Start by dividing up your daily expenses into categories such as housing, utilities, food, clothing, transportation, child care, education, etc. Here are a few tips to get you started:

• Weather strip your windows for added insulation
• Avoid eating out for lunch (It can really add up)
• Consult a Do-It-Yourself book for simple home repairs
• Keep your car tires inflated to increase fuel efficiency
• Attend gallery openings, art walks or free concerts for entertainment.
• Time your clothing purchases around holidays to take advantage of sales.

You can consult ClearPoint Financial Solutions, a non-profit debt counseling/management agency for further money saving tips.

Get Educated and Get Help!! - The Value of A Debt Management Program

Over the years, millions of people have been helped by the services of reputable debt counseling agency. Through debt counseling and a debt management program, also referred to as a DMP, individuals have been able to significantly reduce their debt and start on their way to a brighter financial future. Many individuals believe that bankruptcy is their only option to managing the excessive amounts of debt they have amassed.

If you have tried on your own to manage your debt effectively and reduce what you owe, and you find that you are still unable to pay your creditors on time, you may find that debt counseling and a Debt Management Program could be just the solution to your problems.

How Does a Debt Management Program really work?

If you have already been through an initial budget counseling session with a certified Financial Specialist, and have determined that a Debt Management Program is the best solution for you, you will first need to get all of your creditor information in order. Your credit information includes all unsecured debt such as credit cards, medical bills or loans.

Your debt counseling agency will negotiate with your creditors to lower your monthly payments and reduce the amount of interest and finance charges you are paying on your outstanding debt. It may also be possible to have late charges and over-the-limit fees waived if you sign up for the Debt Management Program.

ClearPoint Financial Solutions is certified in providing debt counseling and guidance through a Debt Management Program. After you enroll in the Debt Management Program, you will simply make one monthly payment that will be distributed accordingly to your creditors. Throughout the Debt Management Program, you will receive periodic follow-up and counseling with your Financial Specialist. Together you will discuss your progress, review your goals, and help you adjust your budget so that you are always maximizing your savings.