…Instead of accumulating wealth, many falling further behind on payments

Dateline NBC – America’s Great Recession, 20 months and counting, has created a new, unrecognizable economic landscape. Foreclosures continue to melt away the American Dream. Millions have lost their jobs.

Just like our country’s economy, it is debt caused by credit that is causing most of our problems.  In the Dateline NBC story they mention an unfortunate family who at first were doing OK.  Husband and wife worked and they were doing “fine” on their two paychecks even with a child in the first year of college.

Then their son got sick and life changed dramatically.  They were fortunate to have medical insurance and that covered most of the medical expenses…  until it didn’t anymore.  The wife stopped working to be with their son and the bills started to pile up.

They did what most people faced with a loss of income do, and that was to use their credit cards as a stop-gap — living basically on credit until it was maxed-out.  From first-hand experience, I can tell you this is absolutely the wrong thing to do.  But you feel like you have to do whatever is needed to survive.  …knowing full well the credit is going to run out and then you will have even more debt to deal with.

Many people find themselves in this situation and just have no idea what to do or how to get out of the overwhelming debt.  The mortgage on the house is for more than the place is worth, there are usually two cars that are financed, full coverage insurance that goes along with that, electric, water, gas and other utilities, not to mention food and fuel for the cars…  Just what do you do if your expenses are more than your income?  Making up the difference with credit cards is NOT the answer.

What is sad is that this couple’s situation is becoming the norm as opposed to the unique.  We were once a nation of savers, now we are a nation of debtors.

Like the NBC article mentioned – “What was once a nation of savers is now a nation of debtors – borrowing money for everything from cars to college. And even before the unemployment rate soared, nearly half of American families were carrying credit card debt, with average balances of more than $7,000.”

So what are you to do when you find yourself in the situation where your income is less than your monthly expenses?  Here are a few tips that could help get you back on track:

Change Your Withholding — Go to your Human Resources Department and have them withhold less from your paycheck by increasing your exemptions. If you are making less than $40k, don’t worry about owing taxes, likely you’ll end up getting a refund at the end of the year anyway.

Track Your Spending — Examine your spending habits at the end of the month. You may be surprised to see just where all of your money is really going. A lot of people spend money frivolously without even thinking about it, especially if they are not following a budget. Circle each item on your spending list that you can get rid of or significantly reduce.

Design a Personal Budget — Include all of your important expenses first, such as rent, food and utilities. After you have all necessary expenses covered, figure out how much extra money you have left to go toward paying down your debt.  ~This is the Key! Pay off debt!

Pay Off Debt — This is the most important part of becoming debt free, pay off debt, duh. Pay the lower balances first.  There are differing views on which debt to pay first but I like the idea of paying the one with the smallest balance first.  It is a real boost to your motivation to get something paid off.  It won’t take as long to pay of the lower balance debt.

Stick to It! — OK, maybe this is the most important part of becoming debt free, actually sticking to the plan.

If you find yourself in a situation where your debt is starting to get out of control and your income is less than your debt, it’s time to seek the advice of a professional before it gets too far out of hand.

The professionals at DebtHelper.com can explain the benefits of a debt management program and provide you with a fresh start.

One of the biggest long-term benefits of the debt management plan is the reduction in interest. Reduced interest allows you to pay off your principal balances faster while saving you possibly thousands of dollars in finance charges.

In order to determine if you are eligible for a debt management program, you can fill out an online budget application form now and then you can contact one of their Certified Personal Finance Counselors© at (800) 920-2262.

DebtHelper.com can currently accept clients from the states listed here. DebtHelper.com is licensed, insured and complies with all state licensing requirements to ensure mandated regulations are followed. They are diligently working on becoming licensed in every state and are opening new states monthly.

Please call (800) 920-2262 if you have any questions. DebtHelper.com’s consultations are free, call them any time.