Managing Debt
What is "debt"?
I think individuals should think of debt as a tool. Debt is something to be used wisely, something to be used responsibly, and something to be used to help you achieve your goals.
I want to lower my debt. Where should I start?
If you've built up debt to a level that you're uncomfortable with, you have to take steps and apply discipline to change the situation. The first step that you should take to lower your debt is to prepare a budget, and it should be a budget that will enable you to live the lifestyle that you want to live but still leave enough left over for you to pay down your debt. I think it's very important for individuals to save and to invest. However, if you've built up debt, the first step is to pay off the debt, even before saving, because if you're paying an interest rate of twelve or fifteen percent on a credit card, that interest rate is more than you're going to be able to make if you invested that money in a certificate of deposit or even in a mutual fund. Paying down the debt is a responsible way of helping your financial situation.
Should I hire a credit repair firm?
Credit repair firms can be helpful to enable you to get out of get out of debt or repair your credit. However, there are a number of them that are predatory organizations and they take substantial fees up front, they may misrepresent what they're going to do for you. You have to comparison shop for these organizations as you would with any provider of services.
Should I hire a credit counseling agency?
Credit counseling agencies are not for profit organizations, and they typically will work for no charge or a low charge to help you repair your credit, or negotiate settlements with lenders.
