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5 Reasons Debt Counseling May Be Right for You

5 Reasons Debt Counseling May Be Right for You

Rough financial waters can be managed with efficient debt counseling. There is no reason for you to keep on drowning in debt when a reputable debt counselor is only a phone call away. Asking for help from a knowledgeable debt professional is a good way to find debt relief, particularly if the situations below apply to you:

1. If you don't fully understand your situation

Most people drown in debt because they fail to manage it right back when the debt was still a small problem. Like a dam left with a small leak, it eventually grows larger until the entire thing cracks open and wipes you out. Proper debt counseling prevents this from occurring. 

A good debt counselor can explain your current financial situation, what your options are, and what will happen if you do certain things. But more than that, they will guide you in identifying your financial goals and empower you to achieve them.

Of course, the only way for debt counseling to work is if you will speak openly during your debt counseling session. State clearly why you are seeking help, what your fears are, what you hope to accomplish, and when you want to reach your goals. Then, your debt counselor will analyze your unique situation, help you develop an understanding of it, and give you unbiased information on how best to manage it. 

2. If you can't make payments

A debt is like an open wound that keeps on bleeding; the first thing you want to do is minimize the damage and close the wound to prevent further blood loss. Should you fail to make your payments on time, your debt will incur interest and added charges, which can result to larger monthly bills. The instance you see that the money you have coming in is not enough to cover what is coming out, consider debt counseling. 

This is a common problem with unsecured debt like personal loans or credit card debts. Once you get a collection call and you don’t know what to do, don’t waste time worrying about the problem. The best thing you can do is to seek help to solve it fast.

3. If you have poor spending habits

No matter how much you earn, if you have poor spending habits, you will have a difficult time avoiding debt. If you have a credit card, always pay it in full at the end of the month. If this is not possible, before you buy anything, always consider the cost with interest.

Also, think about the other expenses you have. If you are renting or paying mortgage, your total payments should not exceed a third of your gross income. There are taxes, insurance, and retirement to think about, too. Talk to your debt counselor and set priorities. Everything takes a backseat when all your money goes into paying off debt. Do you really want that for yourself? You should focus on living below your means. Which means not spending more than you make, but some emergencies do happen and can put you completely off track even with the best intentions. This is where getting advice is valuable.

4. If you don't know which debt to face first

Dealing with debt is such a stressful task that it can even cause you to lose track of the easiest, most convenient solutions. With debt counseling, you can rank your debt and focus your energy on things that really matter. Usually, mortgage or rent takes priority, followed by transportation. Your car is important if it takes you to work, which provides your income and health insurance. Next are utilities, food on the table, and medical needs. Once all of these are settled, it is time to tackle credit card debt.

5. If you don't know how a debt management plan works

To solve your debt problems, your debt counselor will negotiate with your creditors. Everyone will collaborate until concessions are made and you have the best chance of paying your dues. Usually, this involves waiving late fees or reducing interest rates.

Asking for advice for tackling your debts is not a sign of weakness. Rather, it shows that you acknowledge your limitations and are willing to do what it takes to own up to your responsibilities.

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