Do you need a debt counseling service, or would you be better off just doing a small amount of research and taking steps on your own to tackle your debt? Before employing a debt counselor, think about this: Are they going to do anything for you that you can’t do yourself for free?
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"Never spend your money before you have it."
- Thomas Jefferson |
In many cases, the answer is no. The reason most people have money problems is not because they don’t make enough at their jobs, but that they don’t know how to handle the money they do make. Most people have no idea where their money is going. They can make budgets for what they believe their typical monthly expenses are, but their actual expenses are usually much higher. It’s so easy and convenient to spend money now -- especially with debit cards, and the Internet – and as a result, our money just seems to slip out of our fingers before we know it. So hold off on that debt counseling service. First try to get your act together independently. While the solutions are fairly simple in concept, the application of these solutions will test your will. This is going to involve keeping track of every penny you spend. Don’t try to guess how much you spend every month on Starbucks, for example; actually keep track of it every day. I suspect you’ll be amazed by how much these “small” purchases actually adds up to. (If it’s not Starbucks, it’s something else. We all have our little expenses that seem cheap individually but add up over time!) Keep a detailed journal every single day of everything you spend. If you pay a credit card bill, write that down as part of that day’s expenses, even though it’s not something you “bought” that day. The point is to record all of your outgoing money so that at the end of the month you can see how much of it is outgoing, and where it’s going out to. After you’ve done that for a month, look at your findings. What expenses can be reduced, or eliminated altogether? Your grocery bill is a good place to start; there are many ways to reduce food costs, including coupons and buying generic store brands. Look closely at the casual, incidental expenses, like the candy bar you tend to buy when you’re filling up your gas tank at the convenience store, or your tendency to download songs (at 99 cents apiece) from iTunes. Those things are cheap, but they can add up fast! Now plan a monthly budget that you can live on but that greatly reduces what you’ve been spending. It will be hard to adjust to this new philosophy, but think of all the money you’re saving! That money can be put to work best by paying off your debts, and getting rid of those excessive monthly payments, which will also lead to peace of mind -- which will make all your scrimping and saving worth it in the end. A debt counseling service can be valuable if you’re truly in over your head and feeling completely overwhelmed by the task of addressing your debt. However, if you’re able to pay your bills on time, and if you can follow these basic rules of finance yourself, then you don’t need a debt counseling service. You can remain independent and work through your problems on your own.
"There are plenty of ways to get ahead.
The first is so basic I'm almost embarrassed to say it:
Spend Less Than You Earn.”
- Paul Clitheroe |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
