Determine Your Debt By Creating A Simple Budget By Connie Barker

Debt is very stressful to many people. In fact, millions lose sleep, have difficult relationships with their spouses and are unable to buy the things they need because of debt. If you have found yourself deep in debt, don’t despair, one tool to use to determine the amount of debt you are in and how to lower it is the budget.

Create a Budget

Creating a budget can’t be stated enough. For something so easy to do, a budget can easily open your eyes on your current financial situation and give you easy insights on things to do to save more money and climb out of debt. A budget is simple to create; you just need a pen and a piece of paper. Create two columns with one side for all the income you take in each month and the other side for all the expenses you have for the month. Total up each column and then compare.

When you are able to compare your income to expenses column you will instantly see your current financial situation. If you have more income than expenses, you are in good shape. You can probably look at your expenses and streamline them a little better to save even more money, but for the most part you are not deep in debt and should not stress out.

For those that find themselves with about as much income as debt, you should be concerned. You will need to cut excess spending each month so that you can save more money to pay off creditors and to save for a rainy day or to save for a big purchase. Look at your expenses column and figure out which expenses are unnecessary. You might notice that you are spending too much on entertainment, eating out or clothing. These expenses can usually be cut with just a little bit of discipline, enabling you to live more comfortably saving more money in the long run.

If you look at your budget and your expenses are more than your total income, you should be very concerned. This means that you are living beyond your means and are racking up debt that can threaten your future. In order to stop digging yourself deeper in debt, you will need to cut spending or raise your income immediately. Since most people don’t usually like to take on a second job, it might be easier to first try and cut back on expenses. You can do this simply by looking at your monthly expenses and determining which ones are non essential. In fact, you can look at all your expenses and determine which ones you really don’t need or use. It can be as easy as eating out 2 times per week instead of four, cutting back on your entertainment costs, cutting back on your cable plan, etc. Internet access can be free from the library cutting an expense there. Groceries purchases can be saved by purchasing off brands. There are many ways to cut expenses, just look at your budget and see what you can live without.

Resource: http://www.isnare.com/?aid=240434&ca=Finances

Debt Consolidation -- Choose Your Credit Counselor Carefully By CharlesEssmeier

Recently passed by Congress, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will require people who are filing for bankruptcy to first undergo mandatory credit counseling.

This is probably not a bad idea; after all, many people with problem debt could probably benefit from credit counseling. A good credit counselor can assist clients with problem debts in establishing a repayment schedule, creating a personal budget, and learning how to avoid debt and credit problems in the future.

The problem is that with the estimated one and a half million additional people seeking credit counseling each year, there will undoubtedly be more credit 'counselors' entering the market, and many of them are only interested in reaping huge profits at the expense of their clients. There are already a number of credit counseling firms working in the marketplace that advertise themselves as 'nonprofit', when they actually are closely tied to for-profit debt consolidation firms. These agencies will strongly encourage their clients to consolidate debt through their partner company, and the result may be a long-term loan for the client that doesn't help them at all, but reaps huge profits for the consolidation firm. How can someone who is genuinely seeking legitimate, helpful credit counseling choose a counseling agency wisely?

*Counselors should listen. If they start pitching a solution to you during the first fifteen minutes you are there, you should be suspicious. A credit counselor should be gathering information about you in order to determine how best to help you. They can’t possibly know how to help if they don’t understand your problem. Unless, of course, they don’t care about your problem and only want to sell generic “solutions.”

*Watch out for firms that want excessive fees up front. Be particularly wary of nonprofit agencies that ask for fees or “voluntary contributions” or nonprofit agencies that tell you that they cannot help you if you do not pay a fee upfront.

*Beware of firms that ask for a sizeable fee to obtain a copy of your credit report. Such agencies should be able to obtain your report at no charge, and you are entitled to one report per year for free.

*Sometimes, bankruptcy is unavoidable. Watch out if the agency doesn’t mention bankruptcy at all, or if they change the subject if you bring up the topic. Debt consoldators cannot make any money on bankruptcy cases, but sometimes, that’s your only option.

*Shop around. Talk to several different agencies and compare what they tell you. Any agency that differs dramatically from what the other agencies are telling you should probably be avoided.

*Check with your local Better Business Bureau, and ask if they’ve had any complaints about the agency.

*Watch out for firms that offer quick solutions to your problems. You didn’t get into financial trouble overnight, and you won’t get out of financial trouble overnight. Any competent debt or credit counselor will know this and will undoubtedly tell you that working your way out of debt takes time.

*See if the agency belongs to the National Foundation for Credit Counseling or Association of Independent Consumer Credit Counseling Agencies. Many do.

By taking a few simple precautions before agreeing to work with a credit counselor, you may save yourself a lot of grief and a lot of money later.

Resource: http://www.isnare.com/?aid=2107&ca=Finances