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February 16th, 2010

Debt Management: Three Questions for Conquering Debt

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For those bearing the burden of credit card debt, how you approach the problem can affect your ability to get out of debt and maintain your finances using cash instead of credit.

Debt Management: Understanding the Path from There to Here

Until the economy went south, you could visit many middle class neighborhoods and see neatly kept homes with amenities including lawn services and pool attendants; garages and driveways were full of late model luxury vehicles, motorcycles, recreational vehicles. All of these things cost money, but few of us were buying them with cash; we took out home equity loans or refinanced our mortgages to get the cash for our purchases. Our home values were going up and up, so why not enjoy life? This is an example of the mindset that gets so many consumers into trouble. Evaluate your debt, and if you’re carrying too much, ask yourself the following questions:

  • How did I get into this mess? Understanding how you got into trouble with debt can help you plan your escape. Are you a compulsive shopper? Do you believe that you must compete with your neighbors, friends, coworkers, and colleagues to “measure up?” Answering yes to either of these questions can indicate underlying issues with money. Professional credit counseling services can help you identify and resolve problems if you spend for the wrong reasons.
  • Do I rely on credit cards instead of emergency savings? As credit cards became more popular and issuers were freely granting high credit limits, consumers developed a false sense of security. They had plenty of credit and neglected to maintain several months worth of savings for emergencies. Using credit cards for emergencies is a costly way to meet unplanned expenses; finance charges add to your balances and make it difficult to pay off high balances. Developing a plan to pay off debt and save for emergencies is essential for successful debt management.
  • What must I give up? Depending on the depth of your debt, you may have to make serious cuts in consumption of discretionary goods and services. Is “maintaining an image” preferable to regaining financial and emotional freedom? Weighing the potential consequences of long term debt against a future free of financial worry can help you reach your goal of eliminating credit card debt.

Rather than being embarrassed about your finances, regard your debt as evidence of lessons learned and move ahead with your debt management plan. If you need help managing debt, please contact a financial advisor or certified credit counseling and debt consolidation service for help.

Post written by Karen Lawson

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  • Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score. Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management. He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others. He can be contacted by visiting his personal site, GoodCreditLiving.com.

  • Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.

  • Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.

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