If you're struggling with debt but determined to pull yourself out, it's important to understand exactly what is required for DIY debt consolidation. Answering the following three questions can help you determine if you're up for the challenge.
1. Can you be objective about your spending?
Pinpointing exactly where your money goes every month is the critical first step to devising a realistic budget that frees up the money you need to pay off debt. You must be willing to analyze every single expense to determine what you have been spending and how much of a deficit that creates for you every month. And then you must be willing to cut out enough expenses so that you end up with a surplus that you can funnel directly into paying off debt.
2. Are you willing to call your creditors to negotiate?
Chances are you've got several high-interest credit cards making it difficult to pay off your debt. Are you ready to call your creditors like a debt consolidation company would and attempt to consolidate the credit card balances into one lump payment with a lower interest rate or at the very least lower the rates on your cards?
This is no time to be shy. In order to help ensure that you're able to pay off your debt, you must speak to someone with authority at the credit card company to arrange for more favorable loan terms and conditions.
3. Is it possible for you to stop using credit and stick to a payoff plan?
Be honest with yourself. Chances are that credit is at least partially to blame for your present debt situation. With a DIY debt consolidation, you're on your own, which means you must successfully ban yourself from any more credit spending so you can pay off the debt you've already incurred.
Paying off debt all on your own is actually a highly satisfying experience, but it takes real commitment. Knowing the questions to ask can help you determine if DIY debt consolidation is right for you.
About the Author:
Julie Bawden-Davis is a Southern-California-based writer specializing in personal finance and insurance. Since 1983, her work has appeared in a wide variety of publications, including Family Circle, Ladies' Home Journal, Parenting, Entrepreneur and The Los Angeles Times.