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Make a Get Out of Credit Card Debt Plan With Free Consumer Counseling

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Carrying a large amount of personal debt is always a burden. When it comes to starting or funding a business, reducing that debt can be essential if applying for a loan since your personal assets are often used in determining your financial worthiness. Plus, credit card debt is just one more financial headache when you’re managing business finances as well as personal finances, and who wants extra headaches?

 

Many of us have been there -- facing down (or ignoring) that giant credit debt monster -- and maybe even tackling that beast more than once. Fortunately, there are a number of resources and strategies that will help you to get your personal credit card debt under control once and for all.

 

(Thanks to @MFessler for the original question in QB Community!)


Be brave and ask yourself the hard questions

 

Understanding your overall debt is the first step in erasing the balances. Ask yourself the hard questions:

 

  • How much credit card debt do you have? Add it all up and face the number. Taking a hard look at what you owe is a harsh reality, but it’s necessary to own it so you can start to tackle the debt.
  • How did you acquire it? Understanding why the debt was accumulated in the first place will really help you to avoid the same mistakes in the future, if possible, and you can start to alter poor spending habits.
  • How can I prevent running up my credit card balances any further? Seeing where you can cut out frivolous spending in the future is a good strategy for not making the same mistakes twice.
  • What can I cut back on today to put more money towards high balances? Cutting out things you don’t really need can mean an extra $10 or even $300 or more that you can put towards your credit card balances until they are paid down or paid off. Look at your household budget -- do you really need Sling TV and Hulu? Can you take public transportation more often instead of hiring a ride? Is that gym membership going mostly unused? Are you maxing out your data plan each month, or could you decrease it and save a few bucks?

 

Take advantage of free debt counseling

 

There are non-profit debt counseling agencies that will help you reign in your high balances. It may feel embarrassing or uncomfortable to expose your deep debt secrets to someone else, but they are there to help and not to judge. Look for non-profit agencies that don’t charge you for their counseling. You can find reputable agencies through the following two organizations:

 

  • Financial Counseling Association of America (FCAA) -- The FCAA is a member-supported national association representing financial counseling companies that provide consumer credit counseling, housing counseling, student loan counseling, bankruptcy counseling, debt management, and various financial education services.
  • National Foundation for Credit Counseling (NFCC) -- NFCC member agencies exist in all 50 US states. They provide financial reviews and education to more than a million consumers each year in person, over the phone, or online.

 

According to the American Consumer Credit Counseling agency (which offers free counseling) these are the 6 things you should look for when choosing a credit counseling agency. It should:

 

1. Be a non-profit

2. Be in business for 7 years

3. Have a state license

4. Charge no minimum fees

5. Have certified counselors

6. Be a member of either the FCAA or the NFCC

 

Make a plan and stay motivated

 

With your debt counselor, figure out a plan that works best for you and your financial situation, and then keep at it until you reach your goal. Of course, that is easier said than done, so continue checking in with your counselor or someone else you trust who will keep you accountable.

 

When you’re facing years of paying down debt, it can be hard to stay motivated. It may help to visualize your debt reduction goals. Make a bar graph on a whiteboard or a poster representing your various balances and each month watch those bars lower. Add up all the monthly credit card payments you’re making now and imagine what you could do with that $200 or $2000 a month once your debt is gone. Think of it as giving yourself a raise!

 

Before you go

 

QB Community members, what are your ideas and strategies for keeping debt at a minimum and/or getting out of debt?