Consumer Credit Counseling? Try Debt Eraser Software Instead  

What is a credit or debt counseling service?

Credit and debt counseling services have been marketing heavily lately. It has become a lucrative field with the average American consumer carrying over a $7000 credit card balance.

As consumers have moved more and more toward using credit and debt in their daily life the average debt held has continued to increase. Many people never learn about how credit and debt work and how it can affect their finances.

When people overspend or incurr too much debt it becomes increasingly difficult to dig their way out. They may not even realize how they got themselves so far into debt. So how could they be able to get themselves out of debt.

Some people don't even know where to start. They just see the rising debt amounts and burdonsome monthly payments getting worse and worse.

This is where where the credit and debt counseling services come in. They can help people realize what they are doing that is putting them further and further into debt and then help them develop a plan to get out of debt.

Credit card & Debt Counseling: Good Or Bad?

There has also been much talk lately in the press and trade publications about whether counseling services provide a benefit to their clients or just put them further in debt. The IRS even launched an investigation into several credit counseling services claiming "non-profit" status. They are finding that some are not really operating as a non-profit entity.

How Can You Tell If Your Credit/Debt Counseling Service is Good?

Although tax status (profit or non-profit) it not the chief indicator of a good credit and debt counseling service most authorities would recommend a non-profit company. But as mentioned before even some non-profits are getting into hot water.

A competent debt and credit counseling service would include advice on changing your lifestyle to live within or below one's means. Their clients should not only be advised on how to get out of debt but also how to avoid debt in the future.

Beware of any firms that advertise that they can get you out of debt in X years or X months. Or they could cut your debt by X%. Reputable credit and debt counseling firms make no claims or guarantees. How could they, until they meet with you and understand your situation.

Companies that advertise heavily on TV, radio and the Internet are doing so for a purpose. Advertisement costs money (Duh!). And most trully non-profit firms do not have the budget to run expensive advertisement campaigns.

What are some of the negatives of credit/debt counseling services?

With disreuptable companies you can end up owing more with their services that you did before they started helping you. Some consumers have complained that debt and bills were not getting paid or were being paid late and incurring additional fees.

Some debt services want clients to sign over all their finacial interests and responsibilities. "We'll pay your bills for you!" they shout in their advertisements. Well, that's nice but how does that help the client learn how to avoid debt in the future?

Some credit services have been found to charge excessive fees either for short term with signing costs or over the long term with "service" fees and other recurring charges. The worst of the debt and credit counseling services impose hidden and excessive fees.

A good non-profit credit agency usually has a community center where a people can meet a with counselor face-to-face. The counselor will then spend a lot of time reviewing the person's financial situation before recommending a strict budget, a debt repayment plan or bankruptcy.

Alternatives to debt and credit counseling services:

So what are the alternatives to debt and credit counseling services?

Pay If Off - Duh!

OK, enough of the sarcasm. Really, you could just work on paying it off. If you can afford your current payment for the next few months, you should look into just paying your debt off rather than spending more money and taking the added risk of a debt consolidation loan.

What's the best way to pay it off?

The two best methods for quickly paying off your debt include windfalls and a debt reduction plan.

Repaying Debt With A WIndfall

When ever you receive money you were not expecting or counting on (not your regular pay) apply that money to your debt (even if it is a debt consolidation loan). You will never miss the money and you just bought yourself an 8%, 10%, 18% even a 25% investment. Its just like putting that money into the stock market and getting a 25% return!

How do you figure that?

Well if you have a credit card, card loan or store account that charges you anywhere from 8% to 25%, by paying off part of that debt, you just saved yourself from beign charged that much in interest. That is money you will not have to pay, you get to keep in your pocket. Maybe not today, but it makes that debt be paid off sooner and you will not have to pay that interest for another month or two.

So if the stock market, mutual funds or real estate scare you - invest in yourself first!

Debt Reduction Plan

A debt reduction plan is a written plan for how you will pay off all your debts. What order you will pay them off and how much to pay each month on each debt. It can also show you about when your debts will be completely paid off and when you will be debt free!

But creating a debt reduction plan can be complicate. Which debts do you pay off first? How do you figure out how much to pay each month? Just how long will this take?

A "Simple" Solution:

Simple Joe has a simple answer for you - Simple Joe's Debt Eraser.