Deciding on how to save money can be completely overwhelming when your in debt. What is already a stressful situation becomes totally unbearable when trying to get help saving money and making better money choices. Most people looking for a place to start, google or yahoo search financial help or a variation of what hurts them the most.

The search results produce a multitude of firms that sounds worse than the problem. The bottom of the search page offers alternative suggestions like,

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No money

Frugal Living

i heart saving money

Save on groceries

Your mind is racing like I have ALL those problems. What do I do now?

First, get an understanding of your situation. Sounds stupid doesn’t it? Well, the fact is that most people in debt bury their head in the sand and ignore the TRUTH of their situation. If you are not detailed about what debt you have, you will never be able to save.

What you need to know about your situation:

  1. Total Unsecured Debt
  2. Credit Score
  3. Total Assets
  4. Total household Income
  5. Detailed Credit Report
  6. Total Equity (Cash, Investments, Home Equity)
  7. Monthly Discretionary Funds
  8. Interest rates on unsecured debt

Yes you have to do some work ahead of time if you want the right answer.

This information will tell any real advisor where you are and what solutions may be best. There are also a few questions you have to pre-think before you decide on a solution. An “image” pain tolerance level has to be determined. The reason most people are in such dire situations is due to the fact that they did not want to ask for help when the problem was more manageable.


Image is the reason. We (as Americans) are trained to keep our money problems to ourselves. Do not discuss money with family, friends, or strangers. We are suppose to be wise enough to do something that no one has ever taught us how to do. Personal money management is not a class in grade school, high school, and most college classrooms. Our parents for the most part have no clue. If they did, the majority of families would not be in such bad shape. In order to save money, you have to eliminate debt.

What are the personal questions?

Do I care what my friends think if they read in the paper that I filed bankrupt?

Can I handle letting someone know that i messed up my financial life?

Am i willing to admit that I am financially lost?

Can I take a 1-3 year plan of struggle to eliminate 20+ years of poverty and pain?

Am I ready to face and tackle my financial situation?

Can I handle my credit being crushed for 12-24months while I fix my problem?

It is important to understand that the vast majority don’t care about debt relief. I know, that sounds weird, but it’s true. People are motivated by cash flow not debt. Think about it…. we buy our cars, houses, and a host of other major purchases based on the monthly payments, not the cost of the product itself. The same is true when someone is in credit card debt. They rarely pay attention to the total balance itself just the minimum amount due. The severity of the problem doesn’t arise until the payments can not be made each month. This simply means that when someone is seeking out debt relief , it is normally cash flow assistance that they are really looking to find.

Two popular solutions other than bankruptcy are credit counseling & debt settlement.

Credit counseling companies look very good on the surface, they are non profit agencies and the cost to the client is normally little to nothing each month. They are widely recommended by your creditors as the first line of defense. A credit counseling agency negotiates lower interest rates with your creditors and puts you on a plan to eliminate your debt in 3 – 5 years. Enrollment in a credit counseling program is reported on your credit report, so this is a hiccup.
The major drawback is that your monthly payments remains very similar to where they were before enrollment. Since cash flow is rarely improved, credit counseling historically has an extremely high drop out rate. It can be a great solution if your cash flow is not an issue, but unfortunately, this is rarely the case.

Like credit counseling, debt settlement plans have pros and cons. Debt settlement is a legal driven system where attorneys negotiate lower payoffs of your debts as opposed to lower interest rates. Legal fees are associated with these plans; however, these plans typically reduce monthly payments by 30% – 40% including these fees. Because these plans attack the debt from the cash flow angle as well as the debt itself, the drop out rate is normally much lower.

These programs allow you to establish an emergency fund which is designed to permanently cut the dependency to credit cards.

Unfortunately, creditors aren’t likely to negotiate these debts while you are current on payments, so your credit score will take a temporary hit.

Credit counseling and debt settlement plans are simply band-aids!!!

The best solution to saving money is a strong game plan that covers your entire financial life. This includes the dreaded budget word. Most average people think that it is a waste of time to track your income and spending. A little known secret is that the majority of wealthy families know where all the pennies are coming from and going to.

As far as which debt relief band-aid is best for you, I recommend sitting down with a specialist. Everyone has different needs and goals, but without someone taking a non-emotional look at your situation, it can be difficult to determine the best course of action.