Getting Out of Debt
By Amy Clark

Well, then reality set in for our family and I began to realize just how easy it is to get myself into debt. My husband lost his job and we had some money saved, but not enough for our family to live off of for any length of time. I returned to work and we continued to try and keep our debt ratio under control. Then we moved and my husband took a job that did not pay as well and I was staying at home and suddenly before you know it, we are in debt. I am sitting at the kitchen table crying because I have no idea how we are going to pay our bills because we are overdrawn on our bank account and out of the corner of my eye I see my salvation. This salvation takes its form in something that looks like a check that I can now make out to myself and make everything in my life right again. This check allows me the credit limit of my dreams and I think why not? What would it hurt? Well, that salvation was no salvation at all, but a trap for a desperate woman like me to get myself into some serious trouble.

So what does one do if they get themselves into debt and how does one ever see the light at the end of the tunnel? I would love to say that my story ended happily and that we are now living debt free, but that would be untrue. We are still trying to pay that debt off, but I will tell you that through careful research, I am now trying to make this situation right. Here is what I have found…there is no quick fix and it takes a strong person to get themselves out of debt. You have to be very committed to get yourself out of debt and you also have to have everyone around you support you in this decision. Here are a few quick tips that I have learned through my research.

• Bankruptcy is not a quick fix. Now this is what I have heard, but what I have witnessed has been the exact opposite of this. I know I am not the only person in this world who has seen someone declare bankruptcy and then you notice that they have a better car and better clothes than you do. When I see this, I honestly believe that bankruptcy sounds good to me. This looks much better than the struggling I am doing right now, but experts disagree with this theory. Bankruptcy will stay on your record for ten years and it can affect your ability to get a job, credit, a new home or apartment, and insurance. This should definitely be your last step, but I say this first because many people jump to the conclusion that this is there only option. This is not your only option, but choosing other options requires hard work and dedication on your part.
  
• Begin with the ceremonial cutting of the cards. Pick the card that you want to save for your emergencies and cut up all of your other cards including the department store cards. By cutting these up you can rid yourself of those temptations. I do not remember where I heard this before, but I thought it was a wonderful idea. Someone gave me some great advice about what to do with your emergency card once. She said to put this emergency card in a freezer bag full of water and stick it in the freezer. Now if you ever think you have an emergency where you need the card, it will require you to wait several hours to allow the card to unthaw before you can use it. This will really put the whole “emergency” into perspective and give you time to reconsider your decision before you go out to make your purchase. I thought this idea was brilliant and worthy of sharing.
  
• Make sure that you are getting the very best rate on your credit cards. A couple of places to check are www.lowermybills.com or www.bankrate.com for comparing credit card interest rates. Beware of the teaser rates!!! I know how tempting a 0% for six months can look, but if your interest jumps to 22% after the teaser rate is over, then the rate really is not that great. Look for cards that offer a low rate overall and always read the fine print on balance transfers, fees, and introductory rates.
  
• Try to pay over minimum balances on your cards to reduce your balance. If you have debt on more than one card choose your battle picking the card with the highest interest rate. I am no math expert so I cannot offer insightful advice on specific dollar amounts of savings over the course of ten years, but I will tell you that the more you can put towards your debts the better off you are. It is not good, however, to sacrifice your mortgage payments, car payments, or utilities just to try to work on one debt. You don’t want your credit rating to go down the tubes in the meantime. It kind of defeats the purpose of paying off your debts. You can give up that morning coffee or any other extra perks and try to put that money that would have gone towards something more fleeting towards something more permanent.
  
• If you find yourself struggling to make even the minimum payments it is now time to put on the charm and see what you can do to make the situation easier on yourself. I would begin with a call to your credit card company. Explain to them that you love being their customer and want to continue being their customer, but noticed that another company was advertising a lower rate and you were wondering if they could match it. This company wants to keep your business and the worse thing that they could say to you would be no. Chances are that the credit company might consider matching the rate and that will make things much easier for you in the long run.
  
• Consider getting a home equity line of credit or taking out a second mortgage to pay off your debts. Make sure that this works out to your benefit though especially since using your home for collateral is a very scary thing. Make sure that you do your own research on both interest rates as well as the risks involved for taking such a step. A couple of great places to look to compare interest rates are www.lendingtree.com as well as www.bankrate.com and www.lowermybills.com
  
• There are wonderful nonprofit credit counseling agencies out there who would be happy to help negotiate your debts on behalf of you. They contact the people that you owe and work out a payment plan with them. They then take all of your debts and combine them into one monthly payment. Be VERY careful when doing this and make sure that this is working out to benefit you and not put you into more debt. Be sure to add up all of your payments yourself first and make sure that you are saving money and not ending up with a heftier payment. Also really research the company and make sure that they are not a bankruptcy company- you do not want to file bankruptcy at this point. Also make sure they explain to you how this affects your credit rating and do your own research on this. It is important to be an informed consumer especially if you are now dealing with a third-party organization.
  
• When you do get yourself out of debt, breathe a sigh of relief and vow to try to never allow it to happen again. I know that it is easier said than done, but allow this to be an eye opening lesson and use credit cards as a last resort.

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Amy Allen Clark is a work-at-home mother of two beautiful children. In addition to running after her children, Amy runs a website for moms offering information on work-at-home employment, menu plans, & ideas for saving your family money. You can visit her website at http://www.momadvice.com and receive tips daily through her blog and forum. The author resides in Granger, Indiana and is a freelance writer for various sites & publications.

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