Getting out of debt
February 22, 2011
The Republic: By Brenda Showalter email@example.com Features editor, February 22, 2011 - 11:55 pm
COLUMBUS - Falling into debt can happen to almost anyone. The loss of a job, medical problems, divorce or major car repair all can lead to a financial crisis.
Without savings to fall back on, credit cards often are tapped into and people find themselves spiraling into debt.
Other times, people slip into debt by not paying attention or being irresponsible, said Ryan Chatterton, financial counselor with Apprisen Financial Advocates in Columbus.
Someone might want the latest cell phone with the big price tag and multi-year contract or the television plan with all the premium channels.
Consumers have to balance their wants and needs, Chatterton said.
When people make an appointment at the local office, Chatterton helps them make a list of their monthly income and expenses.
"We help give them direction," Chatterton said. "Maybe they don't know how to manage their finances or credit cards."
Sometimes people do not realize what they are spending, he said.
If a family, for example, wants to spend $1,000 on Christmas, they would need to budget $83 a month for the year.
Apprisen Financial Associates, the nation's oldest nonprofit credit counseling and financial education organization, merged in January with Momentive Consumer Credit Counseling Service Inc. when Chatterton took over his new role.
Local services include money management counseling, debtmanagement, housing counseling, community outreach, financialeducation and bankruptcy counseling.
Chatterton, whose office is in the United Way Center, can assist with aplan to help pay off credit cards by lowering interest rates andcoordinating monthly payments. The service costs a $25 a month.
Apprisen is different than debt-settlement companies in that all thecredit card debt is paid in full. The payback total is less because oflower interest rates.
Chatterton said one credit card company, for example, lowers its rateto 6 percent instead of the usual rate of about 25 percent.
"Always pay more than your minimum amount due to pay off yourdebt faster and with less interest," said Rita Shrader, first vicepresident and director of deposit products of First Financial Bank.
"Once your balance is paid off, you'll have additional funds to buildyour savings each month."
Shrader also recommends establishing a plan to pay down debt and tocreate a realistic budget.
One way to do this is to use online banking tools, such as bill payment,account alerts and financial calculators.
People need to realize they are not alone in finding themselves in debt,Chatterton said.
According to creditcards.com, the average household with credit cardsowes $15,788.
"It's not always just because of the economy," Chatterton said."There's always someone out there who needs our help."
Action plan: Chatterton recommends people take a close, realistic look at theirincome and expenses and set goals to get out of debt.
"They have to recognize there is an issue before they can do anything," Chatterton said.A good way to start is to track expenses to find out where money isgoing each month.
Consumers then can begin making adjustments, such as reducing non-essential spending.
Some areas are difficult to change, such as finding ways to spend lesson entertainment or to stop smoking, but they can create cost savings.
Chatterton also strongly encourages people deposit what they can intoa savings account. The funds can help with unexpected expenses andkeep someone from having to use charge cards.
"Living paycheck to paycheck is a dangerous thing," Chatterton said.Shrader added that tracking progress provides a good understandingof where money goes and helps consumers focus on their goals.
"When you see your debt diminishing," she said, "it will give you themotivation to keep going."