Who Needs Debt Help?
Perhaps the largest part of debt management is figuring out where your debt came from. I don’t mean which store the debt came from; I’m referring to the reason behind the spending. Of course, some are forced into very heavy debt by a catastrophe, such as unforeseen job loss or medical expenses. But most people I know who need debt management aid simply don’t know how to say no. Debt management is only successful if you don’t slip back into heavy debt as soon as you’ve eliminated your current debt.
Good Debt vs. Bad Debt
Debt help does not necessarily mean debt elimination. Some debt can be considered “good debt.” Having a home mortgage is certainly not as nice as owning your house free and clear, but you’ll surely appreciate your mortgage as you approach the middle of April. The reason is the interest on a home mortgage is tax deductible.
A common debt management practice is to change bad debt into good debt wherever possible. For example, you should consider using the equity in your home to consolidate high interest debts, such as credit cards. The interest from a home equity loan or line of credit is tax deductible, not to mention that the interest rate will likely be much lower than the skyrocketing interest rate on a credit card.
Credit Card Debt Help
One of the most common approaches to credit card debt management is simply to pay off the cards with higher interest rates first. For example, if you have two credit cards with balances, you should aggressively pay off the one with the higher balance while just paying the minimum on the balance with the lower rate. Once the higher rate balance is paid off, then you can attack the other card’s balance. With this credit card debt management strategy, you can eliminate credit card debt several months sooner than if you split your payments equally between your two cards.
Debt Consolidation Services
If you simply can’t master credit card debt on your own, you may want to consider debt consolidation. Many debt management companies offer relief from heavy payments and high rates by allowing you to pay them one lower monthly payment. They simply take your money and make arrangements with your creditors to pay them over a longer period. These debt services should be used only as a last resort before bankruptcy. The National Foundation for Credit Counseling Web site, www.debtadvice.org, is a good starting point for free or low-cost credit card debt management.
Where to Go for Debt Help Advice
One of today’s most savvy financial counselors is Suze Orman, whose books and TV shows have helped many with credit card debt management. Her Web site, www.suzeorman.com, can be a powerful tool for understanding debt and how to eliminate it. Her weekly television show is an hour full of financial information and advice, and it’s free! If you have questions about credit card debt management, check your local listings for The Suze Orman Show on CNBC.
Citibank’s Web site, www.citicards.com, provides advice on how to use credit wisely and how to avoid excessive debt. By clicking on the “use credit wisely” link, you can learn about the common rules of credit, the function of the three credit bureaus, and more.
By Aaron McCullough