Help with Debt and Retirement Savings – T Collins Answered

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Who can I trust for help with debt?

DFA reader T. Collins asked:

I’m lost, I don’t know where to begin, or whose advice to trust. I’m broke and 53 years old, spouse is 55.  We have not saved a dime for retirement.  When I had a little extra I wasn’t paying attention, I lost the business and lost the home.  I work full-time and also a second job, spouse gets SSI.  I’m in debt from credit cards, losing house, etc. and am renting now.  I can barely make everyday bills because I’m so poor.  I have to take money used to pay necessities to get started on this debt so I don’t end up living under a bridge.  I currently make $23,000/yr. – my spouse gets $9,000 after medicare payments.  I just woke up financially… can start a 401k?  HELP!

Debt counseling

Simply put… you need debt counseling, debt management, and financial education.  We could single out the subject of your debt or your lack of retirement savings, but I think the best decision is to steer you in the direction of someone who can help you on a more personal and on-going basis.

Do not feel bad, the need for debt counseling is not something you should be ashamed of, rather it is a common reality for many Americans today.  Our culture and education system have failed to provide most of us with the personal financial skills necessary to live a healthy financial lifestyle.  The reality of this fact is evidenced by the national credit crisis and record levels of consumer debt… among other things.  Couple our excessive culture with aggressive corporate marketing and our lack of individual personal responsibility and we have ourselves a perfect personal finance storm – and T. Collins is but one of many who suffer.

Where can we go from here?

T. Collins, you are not alone and since you did not give specific numbers and are just asking for general advice that is where we’ll focus our efforts.

Trustworthy debt counseling

We need to designate between two opposing business models that confuse the average consumer and erode confidence in debt counseling.

  • “For profit” debt settlement companies.
  • “Not for profit” debt counseling companies.

A trustworthy not for profit debt counseling company will typically offer to help you help yourself and will steer you toward debt settlement and bankruptcy only as last options.

The financial weapons you need, and the ones a trustworthy company will help equip you with are:

  1. Debt counseling – Trained counsel to help you better understand your situation so you can gain an emotional foothold and prepare yourself and your family for the road ahead.
  2. Debt management – Helping you find and work toward real solutions for your specific financial needs.
  3. Financial education – Helping teach you the basics of personal financial responsibility so  you can dig yourself out of the hole and avoid future troubles.

Specific people to contact for help

T. Collins, I will give you two organizations to contact, both of which are trustworthy and not for profit.

  • National Foundation for Credit Counseling – Look around the NFCC website making sure to utilize the Find a Counselor feature.  They offer debt counseling over the phone, the Internet, or in person so be sure to take advantage.
  • Green Path Debt Solutions – Visit their location page to see if they have an office local to you.  I have not had much interaction with debt solutions companies but this is one I can vouch for.

A few personal finance starters

You need to keep a written budget.  You need to live below your means.  You need to sacrifice your wants for your needs… there is no time to waste.  You need to work your tail off to earn as much as possible.  You need to spend as little as possible.  You need to destroy any credit cards you have and implement the cash envelope system to curb any bad spending habits.  Do not fore go necessities to repay debt, make sure the heat is on and there is food to eat, what is left over can then be split between creditors accordingly.  Do not focus on retirement savings now, focus on getting control over you situation then worry about your nest egg.

Think on these things and contact a counselor from one of the sources above.  Godspeed.

What do you think?

What are some tips I may have missed that T. Collins should use to gain control over his dire financial situation?

If you need personal finance advice… ask Matt Jabs.

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