Win the Debt War

February 1, 1997

As of January 1996, Americans owed more than $384 billion on credit cards, according to the 3,600-member American Collectors Association Inc., a Minneapolis organization for third-party debt collection businesses.

If sporadic commission checks are putting you among the debt-laden, the ACA has some advice.

  • Regain control--Determine your total debt and monthly obligations and then itemize your necessary expenses and optional expenses. Stop incurring new debt and cut out unnecessary spending by clipping coupons, buying generic products, and avoiding impulse buys. Pay off debt by using savings and other low-interest assets to settle high-rate loans.
  • Contact your creditors--Do it before your payments are overdue. They may be willing to let you skip a couple of payments and add them on to the end of the loan or work out a payment plan.
  • Track what you spend--Keep a notebook with you and record every purchase. It'll help you see whether you're following your budget and where you may need to make adjustments. You may also see where you're spending money unnecessarily.
  • Make a budget--List all the items you spend money on each month. Look at the total amount of money you expect to come in each month and how much you can afford for each item. Budget so that you have income left over to pay off your debts.
  • If a collector calls--Stay calm and be honest about your ability or inability to pay. Work with the person to establish a payment schedule.
  • Call a credit counselor--If you can’t get your problems under control, call the nonprofit Consumer Credit Counseling Service. For little or no fee, CCCS will help you make a realistic budget and shape a debt management plan. For the CCCS office nearest you, call 800/388-2227. For a brochure on getting out of debt, write to Solving Payment Problems, American Collectors Association Inc., P.O. Box 39106, Minneapolis, MN 55439-0106.
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