Ask an Expert: How Should I Start to Tackle My Debt?

The NFCC often receives readers questions asking us what they should do in their money situation. We pick some to share that others could be asking themselves and hope to help many in sharing these answers. If you have a question, please submit it on our Ask an Expert page here.

This week’s question:  My current financial state gives me anxiety and I would really like to get it under control.  I want to have financial freedom and peace of mind, but I don’t know where to begin. How should I start to tackle my debt?

It takes a lot of courage to reach out and ask these tough questions. Finances often cause people anxiety and can especially be stressful if you are not sure how to tackle your debt. 

Take the First Step

Take a deep breath and rest assured that you are already taking steps toward financial freedom by actively looking for a solution. And, yes, it can feel disheartening to think that your only way out is to get a consolidation loan with a lower interest rate, but the system won’t allow you to do so. It’s frustrating. However, it’s not as bad as you think. Loan consolidations are not always the best option, especially if you have substantial debt.

Loan consolidations don’t eliminate your debt; they just move it around. And if you have a lot of debt, the only way to get a low enough monthly payment is to have an extended repayment period, which can ultimately result in paying more interest over the life of the loan.

Learn About Other Debt-Relief Options

I suggest you focus on other debt-relief options that really offer the solutions you need. For instance, you can contact each of your creditors and ask for an interest rate reduction or a payment plan. You can also attempt self-debt repayment strategies, like the snowball method. With the snowball method, you pay as much as possible on your smallest debt while making the minimum payment on your other cards. When you pay your smallest debt off, you roll over that money to the next smallest debt until you pay it off and so on. It may take some time, but you will see results as you tackle one small debt after the other.

Talk to a Trusted Nonprofit Agency

If you prefer not to handle your debt on your own, I recommend that you work with a financial counselor from a trusted nonprofit agency. You can find NFCC Certified Financial Counselors near you here. It’s important that you work with counselors who genuinely have your best interest at heart because, more often than not, companies offering you solutions that seem too good to be true usually turn out to be scams. So, be aware.

When you work with a nonprofit counselor, you will benefit from holistic credit counseling. Your counselor will start by evaluating your overall financial situation, developing a budget, and helping you find the best way to become debt free. If you want the benefit of consolidating your payments in one, your counselor could recommend a Debt Management Plan (DMP). Similar to a loan consolidation, when you enroll on a DMP, you make one monthly payment to the agency managing your plan, and they pay your creditor. Additional benefits of a DMP include paying your debts in full, in less time, and usually with lower interest rates and monthly payments.

Working toward your goal of becoming debt-free can be difficult at first. But remember that you are not alone. Reach out to a counselor and get empowered to make the right decisions to tackle your debts and regain your peace of mind. Progress doesn’t happen overnight, be patient, and always move forward.

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Simple Tips for Eating Healthy on a Budget

During this time of year, many people are thinking about goals. Two areas that people commonly seek to improve are their finances and their fitness. A major part of improving your physical fitness is to eat healthier, and many people worry that will be more expensive. However, it does not have to be. With a few helpful strategies and some smart planning, you can work toward your health goals without breaking the bank and derailing your financial objectives.

In fact, fitness and finances have a lot in common. Some of the best habits you can develop will actually help you in both areas (self-discipline, cutting out luxuries, etc.). Here are some tips to help you eat healthier without a major negative financial impact.

Be Careful with Subscriptions

In recent years, subscription-based weight loss resources have exploded in popularity. Social media has made it easy for people to market these products and services. Chances are, you know someone who is selling weight loss supplements or weight loss coaching services as a side business. There is certainly nothing wrong with that, but you should think very carefully before signing up and making a new monthly financial commitment.

First, some of these side businesses do not offer much that can really help you. Many weight loss supplements or other vitamins don’t actually make you healthier. Even the services that can help you can often be had for free elsewhere. A weight loss coach might give you tips about what to eat and which exercises to do, but you can get that information from a number of resources at no cost.

There are many online diet planners that can help you build a specific nutrition plan catered to your goals. There are also a ton of websites that can teach you the science behind nutrition and exercise, so that your plan has a good chance of working and isn’t a marketing gimmick. Of course, YouTube is a great resource as well, both for dieting tips and cooking videos but also for free exercise content.

Long story short—you probably don’t need to pay someone else for diet advice. Instead, try saving money by utilizing free resources. If you find that doesn’t work and you need additional help or accountability, then you might consider a paid resource.

Picking the Right Diet

There are a ton of formal diets you can choose from. Some people opt for a balanced approach, while others use low-carbohydrate diets, like Keto or Paleo. You will want to research the various approaches and choose the one that is right for you. However, you should keep in mind that low-carb diets are more likely to be expensive to maintain because the compatible foods tend to be much more costly.

Find Affordable Healthy Foods and Incorporate Them

One piece of good news is that some of the healthiest foods you can buy at the grocery store also happen to be some of the most affordable. Here are just a few examples of foods that are often ridiculously cheap and fit with many diet plans:

Rice
Beans
Lentils
Quinoa
A number of fruits and vegetables
Chicken (usually much cheaper than red meat)
Eggs
Yogurt
Nuts
Pasta

Of course, there are many more foods to consider, but this is already a very solid list to get you started. For other ideas, check out this list from Greatist or this one from EatingWell.

Limit Other Foods

When you add new, healthier foods to your budget, then you will probably cut out some foods at the same time. You may no longer drink soda, and you might also cut out sugary desserts or some red meats. Whatever you cut out, remember that these “savings” will go toward your new grocery budget and can help keep your new eating habits from being too expensive.

Document Your Grocery Trips

If you make major changes to your grocery budget, then you should carefully document your first few trips to the store. Keep your receipts and compare them to receipts from before you made changes to your diet. Also, keep an eye on how the prices of the items you are buying now might fluctuate over time. Since you’re getting into a new rhythm and routine, you will want to track the costs so you can see any major changes.

Look for Discounted Grocers

If you find that certain foods are very expensive, check your area for discounted grocery stores. Many localities have low-cost grocers. Aldi, for example, has become a popular option for many cost-conscious shoppers. But you should also check for discounted grocers, which are essentially the grocery equivalent of scratch and dent stores. They sell slightly damaged food goods (think scuffed or dented packaging) at incredibly low prices. This might be an effective way to buy some of your favorite healthy foods at a major discount.

All the Usual Grocery Shopping Tips Apply

Once you’re in a new healthy-eating routine, then it will be business as usual when it comes to grocery shopping. You will want to use as many of the “normal” grocery saving strategies that you can. To name a few: shop around at various local stores to find the best prices on staple items, use coupons, and use apps like Ibotta and others which reduce your grocery bill further. Most importantly, keep a budget and try to stick to it each month—for groceries and your other major spending categories.

For more help with budgeting or working toward your other financial goals, contact an NFCC credit counselor.

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