First it’s important to note that free debt management programs are a myth. A debt free management personal program is a company or person that consolidates debt and works out payment plans with creditors. They only work with unsecured credit, so if you’re having trouble with a home or car loan, they’ll be unable to assist with those payments. If there is numerous loans and credit card debt however, they work directly with creditors to pay off that debt. They work with all your unsecured credit and consolidate it into one payment which you make to them. They then disperse the money based on what they have worked out with lenders.

A debt free management personal program will have a fee associated with it. Even the non-profit organizations must charge a fee to pay staff and other incidentals. Also it’s important to keep in mind that not for profit doesn’t mean that employees make small salaries. It simply means all funds go directly into the company. This means that although it’s nonprofit, it can still charge a hefty fee. Sometimes they refer to these fees as “voluntary contributions”. Don’t be fooled by that language, it’s just a predatory set of words for “fees”.

While debt management programs are quite helpful, there are alternatives; especially if the debt you’re having issues with is secured (i.e. home or car).

If you’re having trouble with debt collectors calling, remember these rules:
1. A debt collector can only call between 8am and 9pm.
2. A debt collector cannot call you at work if you specifically ask them not to do so.
3. A debt collector is required to stop contact if you request it in writing.

Your car is valuable, but not so if it’s about to be repossessed. In addition to the full cost of the loan, a repossessed car racks up storage, towing and other fees. If it’s about to be repossessed, sell it immediately and pay off the debt as much as possible.

Your home is the most important asset you’ll have in your life. If you’re having trouble making payments, don’t avoid the issue. Call your lender directly. Lenders usually make less money off the sale of a house than a loan. Most of the time they will be willing to do things like defer payments or help in other ways to reduce the chances of foreclosure.

Know your options before considering any debt management service! You can even contact creditors directly and work out your own payment plans with them personally, rather than paying a service to do so.

Debt affects everyone in different ways. For some people it’s a positive experience that creates situations where they’re able to purchase the perfect home or car. For others it’s a disaster that makes it impossible to get a loan for anything, car or home.

When one owes a lot of debt, it’s tempting to consolidate debt into one large payment, but this is a mistake if you have a mixture of high and low interest rates on your debt. Consolidation can cost a lot more if you don’t get an interest rate that is lower than the average of all your loans and debts. For instance , if you get an equity loan at 7% APR to consolidate your debt, but your debt works out to 3.5% interest you’re doubling your interest rate by consolidating your debt onto that revolving credit account.

Credit card and high interest debt is pretty much the only types of consolidation anyone should consider. The object of debt consolidation is to reduce the overall debt, the number of payments made monthly and to make life just a little easier.

Instead of debt consolidation, a better option is what’s called a snowball payment. The way this works is you make the minimum payments on all your cards except the one with the highest interest and balance and add the highest added payment possible. Once you’ve paid off that card you add the payments you were making to the first card and apply the entire payment to the next highest balance/ highest interest rate card. This is the best way to pay off debt for anyone with a lot of credit card debt.

If you’re looking to consolidate credit card debt, a really great way to do so, besides snowballing, is to consolidate to a 0% interest card. The only way this type of consolidation works is to pay off the entire card within the time period the 0% interest applies. After that period the interest rate usually goes extremely high.
When deciding to use any online credit card debt consolidation you can apply at various places, however it’s not a good idea unless you can research the creditor. Not all lenders are insured or reputable. Always research any lender you’re applying with, and if there isn’t any information stay far, far away.

2. The love of debt. My parents don’t have high incomes, but hate looking like they don’t make that much money. That means they love to do stupid things like remodeling the house. They of course have to go into debt to pay for their bad habits.

3. Obsession over money. The poor are often the most obsessed about money. Their self esteem is tied to their personal balance sheet. This causes problems because this unhealthy obsession compounds issues #1 and #2.

4. Belief that it’s impossible to save. Whenever I talk to people about saving money, most tell me that they are barely getting by as it is. The funny thing about that is that usually people are fine taking on extra debt to get things that they want to buy. Apparently it’s easier to make payments to someone else’s bank account than your own.

5. Lack of consciousness. If you don’t hold yourself accountable for what you spend, money will literally disappear. I personally used to ‘lose’ hundreds per month, even when I made less than $1000 per month. I honestly could not figure out what I spent it on.

6. Belief that ’something always comes up’. If you don’t force yourself to save before you spend money, there will never be any left over to save. I’m pretty sure that’s one of the unwritten laws of the universe. :)

7. Lack of long term perspective. Our world is all about instant gratification. This causes us to spend money we do not have to buy things that we do not need.

8. Being broke. It’s easy to feel broke when you are. To change, you first have to decide that you want to.