Getting out of debt - DIY or Outside help?

Question

My soon-to-be hubby and I have collect a lot of debt over the years. Mostly foolish spending habits we had when we were old enough to get credit but still to young to understand the impact it would have as we get older.

Now my question is should we try to get out of debt by ourselves or do we seek outside help. well part 2 of that question is there outside help? something like a get out of debt and plan for your future guy.

Now what are pro and cons of DIY or a planner?

Answer 1

Beware. There are a lot of groups out there who would love to manage your debt comeback. But some of them will take you for $, and most of them will hurt your credit rating. If you're able to still manage things, I say do it yourself like this:

Start by making a list of your debt and the interest rates. Then, start with the highest interest rate. Take all you can afford to pay, pay the minimum on all but the one at the top of the list. Then send all the rest of that amount to that one (the highest interest rate). Once that one is paid off, start on the next highest. Move down the list until it's all gone.

You must be brutal with yourselves. Cut out ANYTHING you don't absolutely need. Remember, every dollar you spend is a dollar that will remain on those credit cards with exhorbitant interest being collected daily.

Go for it!

Answer 2

Obviously, financial planning costs money. Debt consolidators are not the way to go; you may end up paying more, over time, because of their fees.

My profile page has a website that is helpful. Try that.

This is what I'm doing. Whether it will work for you depends on your level of debt and your income, and also on your knowledge of the possible pitfalls.

I have two cards with rather high balances. Choosing the one with a lower balance and a lower minimum payment, I began making double the min. each month. Once I beat that down to a reasonable level, I am going to start doing it with the other card. Can't afford to send double mins. to both companies.

Here's one major catch: As soon as you start beating back a debt, the company will start sending you flattering and tempting offers of extended credit: i.e. "We've raised your credit limit because we love you!"

If you fall for that, you will begin to get hellish bills, and if you miss a payment or two, you can end up in bankruptcy. So don't fall for it.

Instead, when you get that offer, call them and say, "Listen, it'll be a cold day in Hell before I deal with your company again, unless you lower my interest rate."

Say it in a nice way, though.

Then continue to pay off the balance by paying more than the minimum, and obviously, don't use the card.

This may help.

The key is to educate yourself, read all the fine print, and have a plan for paying your balances even in a financial emergency. You've got to be organized and on top of things.

Remember that paying down the debt is not the same as fixing your credit rating. That requires reviewing your report every three months, and demanding, in writing, updates, corrections, and removals of false information. It's quite complex. Sometimes a good bank will have a banking officer who is willing to answer questions on it. There are a lot of Web resources on the matter, too.

From the sound of it, you're not in over your head. Yet.

Answer 3

No no no! Do not seek outside help. They make $$$ off of you. To get out of debt, you have to spend LESS than you earn. If it means moving into a 400/month apartment, do it. If it means eating pb&j sandwiches every night at home, do it.

1. Figure out how much you owe, and to whom.
2. Pay off high interest credit cards first. Do this by paying off one completely while paying the minimums on others. Do not use a credit card for anything. Write checks for everything.
3. Sell anything you can for extra $$$.
4. Eliminate impulse buys and luxuries like movies, lattes, and expensive gifts. Also discontinue memberships.
5. Carpool to save $$$ for gas.
6. Get a notebook and keep track of every penny you spend per week. This will give you an idea of where you can eliminate spending.
7. You can downgrade and save money. Get haircuts at haircuttery, use Dollar Store products, get a cheapo cell phone plan.
Outside help = scammers. Don't borrow $$$ to pay back the money you are already in debt for. Bad idea.
You have to live within your means.

Answer 4

4 things you can do:
1. Increase income
2. Reduce expenses
3. Increase Return of Investment (ROI) in your investment
4. Create multiple streams of income

Personally, I find that an internet business is an easy way to create a passive income because:
1. Requires small to zero capital
2. Gets started right away and easily
3. Allows you to work from home or anywhere in the world as long as there is an internet connection
4. Has unlimited potential to earn money
5. No age or education requirements
6. Doesn't need you to have to have a company

What you need to do is to learn about the internet business as much as possible to discover whether it is for you and what your strategy is. There is free information around.
Good luck.

Answer 5

If you can pay it off yourself, then you should do so. Make sure you are also able to put a small amount in savings each month to help you avoid using credit for emergencies.

If you find that you cannot pay it off yourself, then you may wish to contact a credit counselor. Most credit counselors provide a free consultation, and most debt management plans have fees around $30 a month. If they can save you a few hundred each month, then it can be well worth it. Make sure they are a BBB Accredited Business.

Answer 6

Always keep in mind that outside help will always cost money, and if you're in debt, you probably dont have this money to spend. I would recommend to put yourselves on a strict budget until the debt is payed off. Last year, I had over $10,000 in debt, and with my budget managed to pay off $8,000 in one year, and I dont make very much.
1. Total up your monthly expenses for the household.
2. determine a REALISTIC date for which you would like to be debt-free
3. divide the total amount of debt you owe by the number of months between now and your goal.
4. If this number suits you, ADD it to your monthly expenses.
5. Substract your TOTAL expenses and DEBT Payments From the total monthly salary earned in the household.
6. This will give you your disposible income.
7. Divide that number by 2
8. This result becomes the amount of money you are able to spend on a weekly basis for things other than bills (clothes, restaurants, shopping, etc.)
9. the other half of your disposible income stays in your chequing account to be used for "unforeseen payments" For instance your car gets a flat tire.

Just for fun, the amount I've allocated myself right now is only $50/week of spending money!!! That's not very much but you'll find with a little discipline, you'll reach your goal, be debt free and have more money in your pocket.

You can do this yourself, but it requires a lot of discipline.
best of luck to you!

Answer 7

I am currently on a Debt Management Plan at moneymanagement.org. They are a not for profit agency and are apart of Consumer Credit Counseling Service. They offer counseling and consolidation services. They are the only service that Suze Orman recommends on her site.

This is a link with her stating that, and some tips: http://www.suzeorman.com/igsbase/igstemplate.cfm?SRC=MD012&SRCN=aoedetails&GnavID=84&SnavID=20&TnavID=&AreasofExpertiseID=5

This is the link to moneymanagement.org which is apart of that agency: http://www.moneymanagement.org/

Answer 8

Dr. Phil would ask "How is doing it yourself working for you so far?"

You have proven over the last X years that you CANNOT save money on your own. If you continue trying on your own, you will get the same results. Dr. Phil would also say: "The definition of insanity is doing the same things over and over again but expecting different results." GET HELP. Try www.daveramsey.com and look for an ELP (Endorsed Local Provider).

Answer 9

DIY and get out of debt. Don't use a credit counseling service because it'll be harder to get a mortgage later. When you use a counseling service to a lender it looks like you can't manage your money yourself.

Answer 10

Suzi Orman...she was on Oprah a couple weeks ago. Check out her stuff on finances and getting out of debt. Or you can come up with a killer idea, invent it, and make millions, and you won't have to worry about it all...I know easier said than done.