What to do With Debt?

Do you have so much debt you don't know what to do? What can you do when you can dig out from under all those bills threatening to turn you into a slave to the financier?

My advice, of course, is to not get into this place to begin with. Don't use credit cards, have an emergency fund, don't buy more than you need and pay cash for that. I actually do use credit cards, but I pay them in full nearly every month. Knowing that I need to do this, I keep the amount I charge to a minimum. I really only use them at all to get the reward points :D.

I was not always so bright with my spending. When we first got married we charged some new furniture and when we didn't have the money for something, we quickly ended up with $15,000 in credit debt alone. Then my wife got sick and I lost my good job. We had to charge things to keep on living, with her not working and my only working part time. Really, I should have found better work quicker, but non the less, we ended up with $30,000 in credit debt, on top of the car, mortgage and student loans.

Eventually we worked it out. We stopped spending so much, destroyed the credit cards, I got a better job, and we worked hard to pay them all down a little extra every month. After a few years we got it under control enough that we could by a house. A couple years later we had enough equity in the house that we could roll all our debt into the mortgage.

For us, this was the right thing to do. It was honest. We got into the mess and we dug out. It took a long time and was a lot of work. For other Debt Relief counseling may be a better option. I'm not sure how I feel about this. They contact your creditors and get them to lower your debt in order to get their money. They make arrangements for you to pay less overall. It is great, for the debtor. The problem I have is that when people get themselves into high debt, take this road and get their payments reduced, who makes up the difference?

The creditors still need to make a profit. They don't want just a little profit, they are looking for big profits. They are willing to work with their debtors, because they would rather something back than nothing back. But does this kind of activity mean that I might have to pay a higher interest rate? With 20%+ interest rates being very common, I'd say it is probably so.

Of course, if you have a bunch of 20%+ credit cards, and you are having trouble getting them paid, first remember never to take a high interest loan again, second, call them and ask them to lower the rate, third try to get a new loan with lower rates that you can afford. If none of that works, please to call for Debt Relief help. We should not be paying such high rates. The only reason they get away with it is because we let them.

Debt counseling can lower or eliminate your interest, stretch it out for a longer period of time and help you make it work. Debt Relief counseling claims to be able to actually get the banks to take less than what you owe. I was able to manage the hard way, and got the debt worked out. Our home is not much and we still struggle with finances, but we have no credit debt or auto debt. I do feel good about what we did and we are working to build our finances a little so that our daughter can go to college without worrying about loans and we can have a retirement. I sometimes wonder if we should have gotten help at some point.