Crippled from debt paralysis and wanting to explore how to become debt free?
Consumer Credit Counseling Service of Greater Dallas Inc. is offering some basic tips to remedy the situation.
As explained by Gail Cunningham, vice president of business relations for CCCS Dallas, debt paralysis is when debt overwhelms a person and instead of being able to take action, he or she is frozen with fear and confusion.
Many Americans are drowning in debt and this can be attributed to various factors including the overuse of credit, unexpected expenses, a reduction of income or job loss or an unforeseen illness or injury. While some Americans are prepared for the inevitable, many are often blindsided by the overwhelming debt - which seems to paralyze them.
“Americans need to recognize the financial warning signs and, most importantly, understand the basic rules of money and credit management in order to avoid being paralyzed by debt,” Cunningham said. “Understanding the basic rules of money and credit management include tracking your spending and knowing where every penny is going, taking a financial inventory and knowing how much money is made, how much is money owed and knowing the current debt obligation. Credit is a good thing to have but a person has to use discipline control in spending and not charge any more than he can afford to pay when the bill arrives.”
CCCS Dallas’ mission is to bring financial literacy and wellness to consumers, Cunningham said.
“CCCS Dallas is committed to providing preventative financial literacy education and preparing consumers for those inevitable rainy days,” she said. “We focus on prevention and it is our hope that people come to us before they dig a financial hole. We have a dozen workshops available to consumers — free of charge — which features financial tools to prevent a debt crisis from happening or resolving it.”
Overspending and becoming lethargic when it comes to balancing checkbooks or tracking inventory can lead to debt paralysis, but recognizing the signs beforehand can likely prevent it.
“There are many signs to be aware of before slipping into debt,” Cunningham said. “If you are paying your bills late or receiving calls from collectors, if your balances are increasing, if you are hiding purchases from your spouse, if you are charging even small items, if you are concerned over your debt and if you feel like you’re in debt, then you probably are. The only way I see to remain debt free or preventing it from happening is by either by an income increase or a decrease in expenses. Tracking expenses and looking at every cent you’re spending is the way you can be in charge.”
CCCS Dallas offers some basic tips to prevent debt paralysis:
Do not hide purchases from family members. Being dishonest about your spending not only leads to financial trouble, but also can strain personal relationships. Do not apply for new credit cards just because the credit card limit on existing cards has reached its limit. Pay off the balance and adjust spending habits — do not apply for more cards. Do not start charging when there is no money. It is not a good idea to routinely rely on your credit card to pay for living expenses when the cash is not available. As a general rule, you should not be spending more than 20 percent of your take-home income or credit card bills or loans. Do make more than the minimum credit card payment. The NFCC recommends paying at least double the minimum required payment. Do reduce expenses wherever possible. Look for no or low-cost entertainment and cut back on other day-to-day spending. Do work with your creditors. Creditors will work with you to come up with an alternate payment arrangement. Do seek help from a credit counselor. A counselor can customize a spending plan that fits your lifestyle.
CCCS Dallas is a nonprofit, community-based credit and debt management service. Established in 1974, CCCS Dallas and its affiliate offices provide financial education and counseling to consumers in-person, by phone or Internet through its 24 locations in Texas, Oklahoma, New Mexico and Colorado.
CCCS Dallas is a member of the National Foundation for Credit Counseling, the nation’s largest and longest serving national nonprofit credit-counseling network.
CCCS Dallas has a local office at 820 Ferris Ave. in Waxahachie. For more information, call (972) 938-9672 from 8:30 a.m.- 4 p.m. Tuesdays and Thursdays.
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