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I was financially clueless when I was young. I never balanced my checkbook. I used my ATM card to run balance checks. I spent unwisely. I also had health issues without having health insurance. That gave me buckets of debt when I had no idea how to deal with it. I sought help through a credit counseling service and learned a great deal.
Not all credit counseling services are the same. Some are genuinely there to help you. Others want to sell debt consolidation loans. I ran into several of the loan-sales kind before finding an objective one.
I brought a lot of paperwork with me to the first meeting with my counselor. It was a similar stack to the one I give my accountant at tax time. There were copies of every bill, bank statement and financial document I could find. It takes a bunch of paperwork to help someone else get a clear picture of your financial life.
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It was all necessary, allowing the counselor to analyze where every cent flowed in and out of my life. When you look deeply at your finances the amount of waste can be shocking. It stunned me to learn how much I spent on non-essential things.
That was critical information to have since step two was creating a very specific budget. The budget took the information from the first step and detailed how I would use what money I had. It showed me how to cut wasteful spending. The counselor was very thorough, accounting for things that I?d have missed ? even the annual cost of haircuts. When he finished I had a workable plan that would get me out of debt.
My counselor was also realistic. He urged me not to agree to a spartan budget if I did not think I could stick to it. He included reasonable leisure money in the budget. Avoid any counselor who insists you should live like a monk. You may find it impossible to follow such a plan ? I know I would have.
We discussed several options. One was a consolidation loan, an idea he discouraged but which he had several referrals for if I chose it. He made me feel I was not being herded into a loan that would make him money. He also discussed bankruptcy and suggested that if I wanted to entertain that route to speak with a qualified attorney.
When going through credit counseling you should seek out that kind of open-minded approach. Beware counselors who only discuss one option. Even if secondary options are less useful your counselor should discuss them reasonably and show mathematically why some make more sense than others.
In the end I went with the proposed budget. It took some time to pay off my debt but I finished the process with a sense of pride in having made good on my commitments. I learned that I can live more frugally and that having a structured plan is a key element in successful debt management.
If you ever feel the weight of high debt and seek credit counseling you may find it to be a helpful process that provides you the roadmap you need to navigate clear. It certainly did for me. It takes time but it?s worth it ? personally and financially.
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