Debt Weary Consumers Face January BluesTuesday, December 29, 2009

Consumer Credit Counseling Service of Greater Atlanta Offers Tips to Get a Handle on Debt and Beat the Blues

ATLANTA GA, December 29, 2009 -- Now that the holidays are over, many consumers are haunted by the shopping ghosts of holidays past, as bulging bank and credit card statements arrive in the mail. The momentum turns from holiday shopping and cheer to panic and fear for those who piled holiday charges onto an already-heavy debt load.

"This is the time of year for many consumers when the joy of the holiday season becomes a distant memory and the consequences of overspending begin to set in," said Mechel Glass, director of education for Consumer Credit Counseling Service of Greater Atlanta (CCCS). "It is also a great time to get a handle on debt and make changes to ensure a healthy financial future."

Average credit card debt for households with at least one credit card has more than tripled over the last two decades. As balances begin to bulge, consumers should not take the power of budgeting for granted. CCCS offers these tips to help consumers get started on a strategy to reduce and eliminate debt:

  • Make a New Year's resolution to: balance your checkbook each time you receive a paycheck to ensure that you are not spending more than the amount you make.
  • Keep track of your bills. Designate a filing cabinet or secured box for bills and financial statements. Make separate files for bank statements, tax documents, credit card bills, medical receipts, mortgage statements and other records. Keep up with due dates.
  • Create a monthly budget. Your budget is your spending plan. To create a budget plan, determine your monthly income and recurring expenses like rent or mortgage payments, utility bills, food, transportation costs, tuition, savings, entertainment and personal grooming. Then identify other recurring and periodic expenses like clothing, appliances and maintenance, gifts, insurance and vacations.
  • Prioritize your expenses and spending. After writing down your expenses, prioritize them based on your "needs versus wants." Set spending limits and estimate costs for each expense. If any funds are left over after monthly expenses are paid, split them between debt reduction and savings. Pay down high-interest credit card bills and loans. Use extra funds to increase your savings and look for ways to reduce daily spending. Bringing your lunch instead of eating out and skipping that morning coffee and muffin can add up to hundreds of dollars in savings each month.
  • Develop a diversified savings plan. Savings should not be limited to retirement planning. It's important to save for a down payment on a home or vehicle or for uncovered medical expenses. Make regular deposits in an interest-bearing account. Take advantage of employer-sponsored benefits, such as retirement and flexible spending accounts.
  • Recognize the early warning signs of debt trouble. You may be approaching a debt crisis if: you're behind on the mortgage or rent and utilities, you're using credit to buy items you should be able to buy with cash, you're skipping some payments to make others, you're getting notices or calls from bill collectors, or if more than 25 percent of your take-home pay is going to credit card debt.
  • Don't suffer in silence; take action and get help. If you are feeling overwhelmed, there are steps you can take. If you know you are going to have problems making payments, you can contact your creditors to explain your situation and what you're doing to meet your debt obligations. Depending on the creditors' policies and your situation, credit and payment history, you may be able to negotiate the amount of your next payment or a lower interest rate. Remember, your creditors would rather keep you as a customer than lose you to bankruptcy or foreclosure. You can also work with a certified credit counselor who will help you assess your situation and provide tools to help you develop a plan of action.