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Debt Management

Credit Counseling

Holidays

Let new year spur you to erase credit-car debt

Friday, January 14, 2005
From the Associated Press Eileen Powell

As those holiday credit-card bills roll in this month, many people have a deep sense of discomfort.

But credit experts say instead of feeling overwhelmed by their bloated balances, consumers should use the occasion to get a handle once and for all on their credit-card debt.

There are steps consumers can take themselves or with help from professional credit counselors to deal with their debts.

Susan Shain, of Bethpage, N.Y., sought help from the nonprofit Consolidated Credit Counseling Services of Fort Lauderdale, Fla., when she was overwhelmed by credit-card debt. She said a divorce several years ago set her back financially while the day-to-day costs of raising two daughters kept rising.

"I was using my credit cards a lot," Shain said. "Part of it was covering necessities. But mostly it was to make sure the kids were okay, because I just didn't want the situation to affect my daughters."

She estimates some $9,000 of her debt was to cover gifts and other holiday spending over the years.

Shain now works two jobs, full time as a surgical technician and part time at a gourmet food store, with part of her income going to pay down her debt.

Shain admits she still sometimes overspends at holidays and that "I tend to get stressed" when the bills arrive in January. But now she handles the situation by asking for extra shifts "and I pay the balances off as fast as I can."

Howard Dvorkin, founder of Consolidated Credit, said many people have so many credit cards they don't know how much they owe overall. He offers a step-by- step approach to help consumers work on the problem:

First, list all your bills on a single sheet of paper in three columns: who you owe, how much and the minimum monthly payment.

Then look at your earnings and spending.

"With earnings, look at every aspect," Dvorkin said. "Can you adjust your (tax) withholding to get a little more in your paycheck each month? Do you need to find a part- time job to supplement your income?"

The final step is to take that extra money and apply it to credit- card balances.

Dvorkin, who is the author of the soon-to-be-published "Credit Hell: How to Dig Out of Debt," suggests consumers first go after the balance on the card charging the highest interest rate.

He also said it's important for consumers to switch to cash and debit cards until their debt is under control.

Dvorkin said consumers who feel they need help should consult credit counselors, who can help them work out budget plans or get them into debt consolidation programs. Dvorkin's site is www.consolidatedcredit.org." Two associations of nonprofit agencies maintain Web sites: The National Foundation for Credit Counseling at www.nfcc.org and Association of Independent Consumer Credit Counseling Agencies at www.aicca.org.