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4 Simple Steps To Decide If You Need A Debt-Relief Service or If You Can Do It On Your Own

Posted By:  |  April 2, 2014  |  0 Comment(s)


Article by: Anthony Manganiello

Author of The Debt-FREE Millionaire and creator of

Since 1995, I’ve helped hundreds of thousands of people become debt free. What I’ve found most interesting is that when people think of “debt freedom,” they typically only think about paying off those plastic parasites (a.k.a. credit cards). However, the last time I checked, debt wasn’t limited to the plastic kind.

To achieve TRUE debt relief, consider this. Imagine having no car or mortgage payments as well no credit card payments. If you were to add up all the debt service payments you make, the total would likely equal several thousand dollars a month (including mortgage, car, and other payments like student loans, etc.). What would your life be like if ALL OF THOSE payments were eliminated? Let that sink in for a moment…

In my experience, I’ve found that most people only begin to think about debt relief when making those payments begins to make them break a sweat. You sit down with your checkbook, and that stack of bills, and begin to realize that your bank balance disappears before you get through that stack of bills. It’s then that you begin to realize that maybe your debt has gotten out of control.

The question is when do you really need a debt-relief service, and when can you start a debt elimination program on your own? At first, the answer seems simple, but that’s not always the case.

If paying your bills every month raises your blood pressure, you may think that it’s time to call D-E-B-T-9-1-1. But is it really? There are times when you can trim you budget temporarily (for several months or so) and create the relief you need and avoid enlisting the help of a debt-relief service.

To accomplish this, all you need to do is:

  1. List all of your debts down on paper, starting with the smallest balance first, and work your way down to the one with the largest balance (usually your mortgage). Next to each balance be sure to write down the minimum monthly payment required.
  2. When you’ve done this, take a look at your budget and pay attention to specific items (like how much you spend on things like entertainment, groceries, etc). And see if you can trim your overall living expenses down to a number that matches the minimum monthly payment on the first debt on your list (this is one of those cases where “the more the merrier” REALLY applies). Ask yourself “Do I really need every imaginable channel from my satellite service?”
  3. Add whatever extra amount you were able to create to the minimum payment of the first debt on the list.
  4. Take that total amount and divide that into the balance. This will give you an approximate number of months until that debt is completely paid off. Doing this essentially creates “relief” equal to the amount of that minimum monthly payment. The answer to the division question is the estimated number of months until that relief can be experienced. At that point, you can decide whether or not to continue this process and snowball that amount until you’re completely debt free, or enjoy the extra cash you generated. (HINT: I suggest doing the former if possible).

However if you’re scoffing because you’ve already trimmed your living expenses down to the bone, and still can’t make ends meet, then doing it on your own is most likely unrealistic. If this is the case then you may need the help of a debt-relief service to help you get your head above water.

This is the point where you usually just pick up the phone and call one of those numbers from the commercials you see. Or, if you’re a web surfer, you go online to find help. And this is where most people go wrong.

Why? Simple. Because if you go directly to trying to find help before doing this simple calculation, you could be putting yourself into one of those “from bad to worse” scenarios.

Here’s what you need to do…

Take that “budget” you’ve been looking at and break up your monthly expenses into three different categories.

  1. Living expenses: Things like utilities, groceries, cell phone(s), etc. Expenses you’ll have even if you were completely debt free.
  2. Secured debt payments: Things like your mortgage and cars. Payments on things that have been collateralized where, if payments were to stop, the collateral would be repossessed. In this category, also add things like student loans and payday loans.
  3. Unsecured debt payments: Things like credit cards or department store cards that have a line of credit.

Next, get the total of your household’s monthly “NET” income. And from that total net monthly income subtract your living expenses and secured debt payments. The answer to this simple equation is very important.

Net Monthly Income – (Living Exp. + Secured Debt Payments) = Very Important #

What’s so important about this number is that THIS is the amount you can afford – on a monthly basis – for any debt relief service. Most people just call these providers and work with them to determine a payment and then start the program. BUT, if you complete this simple step, you’ll know if you can “complete” the program you’re signing up for instead of just “starting” it. Many people who start a debt-relief service don’t complete it, and missing this step is one of the biggest reasons why.

Debt-relief services can be helpful when applied to the correct circumstances. So, follow the steps outlined here, and you’ll improve your chances of achieving the relief you’re hoping for.


  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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