What Is Credit Credit Counseling? Do You Need It?

debt management plans

Credit counseling is a program where your finances are examined and a plan is created to help you eliminate your debt. Each case is different, but there are some general practices with credit counseling. What kind of help can you expect? 

  • Your finances are examine to get an idea of all your assets and debts
  • Have the counselor review the financial snapshot and offer suggestions on what can done
  • Negotiate a deal with creditors and create a debt repayment program

Can You Do It Yourself?

Some people may wonder why credit counseling would be necessary. The above steps don’t look to complicated, you may think you can do it yourself. That is possible, but then why haven’t you’ve done it already?For some, credit counseling is a viable option. However, if you’re truly motivated and determined to get out of debt, you can on your own.

Best Guides to Reducing Your Debt

If you want to get out of debt yourself, then I’d recommend the following books to not only get you educated on it, but to give you specific tactics on getting it eliminated.

  • Total Money Makeover (and workbook): If you’re determined not to get into debt again, then I’d recommend grabbing this classic from Dave Ramsey. He’s hardcore when it comes to debt (there’s no ‘good’ vs ‘bad’ debt- no debt is the goal), but his method works.
  • I Will Teach You to Be Rich: Ramit is a great negotiator and he has practical scripts that you can do get fees removed and interest rates lowered as you work to pay down your debt.

Digging Yourself Out of Debt

If you’re willing to do the work, here’s a general guide to get you started on paying down your debt.

  • Learn the Exact Amount of Your Debt: Find out how much debt you’re in by either calling up your creditors or compiling all your current bills. Grab or create a debt reduction spreadsheet and list all your creditors, the interest rates, and the total amount you owe.
  • Don’t Dig Deeper Into Debt: When I had credit card debt, taking the cards out of my wallet was a easy and effective step. I had less temptation to rely on them when I wanted to make an impulse buy. I was creating a barrier for myself and improving my finances. Hide them, freeze them, or perform a plasectomy.
  • Set Up a Realistic Payment Plan: When you speak with your credit card company’s customer service representative remember to be polite and firm. You’re trying to get them to give you a better payment plan; being rude will not accomplish that and could make it worse.
  • Automate Your Payments: Keep yourself on track by setting up all your payments through your bank’s online bill pay program.

If you occasionally negotiate better interest rates as you pay down your debts, you can get out faster.

Thoughts on Credit Counseling

You have to decide for yourself whether or not you need credit counseling help from an agency. If you’re looking at the non- profit option, there is National Foundation for Credit Counseling. Locating the nearest office is as simple as calling 1-800-388-2227. There are other options as well.

I haven’t used credit counseling so I’d really like to see other people’s perspectives. Do you think credit counseling is a good option for people in debt?

Photo Credit: Alan Cleaver

VINE & LACE

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