Solutions to Reducing Your Debt / August 2006

Racine Journal Times / To Your Wealth

Justus Morgan

A day doesn’t go by that I don’t open my mailbox to find an offer to apply for a new credit card. My guess is that you are receiving the same offers. There’s a reason we receive so much mail; because people sign up for them. The evidence of people applying for cards is apparent when you look at the levels of consumer debt and low savings rate in the U.S. While there is little each of us can do individually to affect the national averages, we can impact our own personal financial situation.

There are several solutions I recommend to individuals and families who find themselves overwhelmed by debt burdens. As part of my frustration of receiving too many offers and to research potential solutions for this article, I found several relevant options for anyone suffering from mailbox overload. One of the easiest steps to cut off the flow of new offers for consumer loans is completing the online form at www.optoutprescreen.com. This tool prevents the three major credit reporting bureaus from releasing your information to credit card or insurance companies. You have the option of electing a five year period or a permanent election. To reduce the number of telephone solicitations, visit www.donotcall.gov to remove yourself from telemarketing lists.

A more intensive solution to address issues of debt and personal finance education in general is to attend seminars or courses for consumers. It is important to approach many of these organizations with caution as they often have their own agenda in addition to helping you. One organization that has been widely praised is Dave Ramsey’s Financial Peace University. This is a 13 week course that teaches individuals and families how to improve their relationship with their finances to achieve their goals in life. To find out more information about this program, visit www.daveramsey.com and select the Financial Peace University option to find a local program.

I spoke with two of the local instructors, Gary and Carla Kovacs in researching this article. Gary and Carla volunteer their time to teach others the principles they learned because of the impact the program has had on their lives. As a police officer and nurse, you would not ordinarily think the Kovacs would be a good source for personal finance wisdom. However, due to the life changing experience from the program, the Kovacs wanted to be able to provide to others the same experience they found so valuable to themselves.

If there doesn’t appear to be any light at the end of the debt tunnel, then perhaps more drastic measures are required. Debt counseling services are available to consumers to meet with specialists who can assist with negotiating with companies on behalf of the consumer to reduce or structure payments that are more manageable to the consumer. Some of these firms are for-profit which means they expect to get paid by you in the form of fees from each payment you make. I’ve even seen companies that allow you to pay their fee with credit cards which increases the amount of outstanding debt. A local resource with a positive reputation for helping consumers is Family Services of Racine which provides debt counseling services to Racine and Kenosha residents.

Ignoring and hoping your financial issues will solve themselves is not a successful strategy for making progress towards a healthy financial life. While I often hear said “it’s easier said than done,” there is no excuse for not being proactive in your approach to handling your financial affairs. Just like everything else, there is no quick fix to digging yourself out of debt but you can commit yourself to making changes sooner rather later.

Justus Morgan is a Certified Financial Planner practitioner at Financial Service Group, Inc., a registered investment advisory firm in Racine, website address www.toyourwealth.com.