Throughout my tenure as your local debt reduction doctor I have come across many questions from eager readers who are looking for a leg up on the competition in the debt reduction world.  Many times I don’t have the time or energy to respond to every particular request, but I figured it would be appropriate to take some time and answer some of these questions right here in an attempt to let everybody benefit from these answers.  So, without further ado, here we go.

Dave H. Chicago, IL – Dear Doc, I have spent a seemingly endless amount of time trying to save money and control impulse purchases but still never seem to be making a dent towards my credit card debt. What should I do?

Dave, this is a very common problem that thousands of people face every day.  It seems that no matter how hard you work to save and save you still cannot make any headway towards your credit card debt.  The odds are that you are facing an account with a high interest rate that is preventing you from becoming financially secure.  Your best bet is to look into a balance transfer into an account with a lower interest rate.  This will allow you to save more money and pay off your balance at a much more rapid pace.

Janice R. Portland, OR ñ Debt Reduction Doctor, I have several different credit card accounts that are beginning to get out of hand.  I recently closed the accounts to start making payments on them but the interest levels are still killing me.  What do you recommend?

Janice, your problem is very similar to Dave’s in terms of the solution.  Since your accounts are closed you don’t have to worry any longer about making more purchases with the cards, but the interest will continue to accumulate until you pay off the remainder of the debt.  I have mentioned before that the best tactic in this scenario is to pay off the highest interest accounts first before working your way to the accounts with less interest.  Continue to make minimum payments in your low interest accounts and spend your extra money on closing out your higher interest accounts.  Keep working this strategy until you pay them all off and are free of credit card debt!

Scott P. Jacksonville, FL ñ Dear Debt Doctor, I have heard recommendations on investing as a quick way out of debt. Is this true or just another rumor that is going to cost me money?

Scott, this is a very specific situation. Investing can be a fabulous way to raise more money and reduce your debt, but it can also be a way for you to lose money and put you further in debt.  Honestly this situation has more to do with your comfort level than my advice.  Whenever I am giving financial advice I always tell people to go for what they feel is best because they know themselves and their budget better than anybody else.  This is your call Scott, just know that it can work both ways.

These are just a few of the questions that I have been asked recently, and I am hoping that my responses were helpful.  Much of this process comes down to determination and self control, and if you are able to show such things you are usually going to be in fair shape.  None of my advice in this column is anything different from my previous work, but sometimes it is nice to get a refresher course.  Getting out of debt is a simple idea but a complex process, so always remember to be diligent and seek help whenever you need it.

I have often heard that I am too negative when I am trying to teach my approach to debt free living.  I often hear the phrases, lighten up, or be easy, as if these small bits of advice are going to change the way I feel about this situation.  Honestly, this is not the most uplifting line of work, and the people who commonly seek my counsel are in difficult situations and they just want an exit.  However, I have put all that behind me, for this entry at least, to help produce a positive reinforcement to all my readers out there who might need a little pick me up!  So, without further ado, here is my go get’em speech of the week.

If you are one of the millions facing debt right now, and if you’re reading this odds are you are, do not fret!  You are certainly not alone.  Almost every other person you see walking down the street is facing the same financial crisis you are.  Sure they make more or less money than you, but they still pay bills and taxes and have other financial demands that they cannot always meet.  You are not alone in this seemingly endless cycle of debt and frustration, so do not feel like some sort of social outcast.

It is often embarrassing for people to admit their financial struggles, and it is not something that is often discussed at dinner parties or in open forums.  However, talking and sharing stories that either helped or hurt you in the past may prevent similar instances from happening to others.  If somebody is able to share with you an example of something that bit them in the financial backside, wouldn’t you be interested in hearing about it so you could avoid it yourself?  Share with your friends or family the different experiences you’ve had, because you are certainly not alone in this fight.

Another great way to begin to feel more positive about your financial stability is to speak to a financial advisor.  Now I have recommended this several times in the past, but this time it is for different reasons.  Of course they can help bring stability and reason to your budget and expenditures, but they can also give you the personal touch that internet forums just cannot provide.  They can contribute with positive encouragement, and can help let you know when you are on the right track or making fiscally responsible moves.

It is easy to let the despair of debt creep over you like a looming sunset, but that doesn’t have to be the case.  This is not purely a gloom and doom situation, there is plenty of positive hope as well.  Thousands and thousands of people have escaped debt’s clutches and lived to tell about it.  Odds are you know some of these people, some even better than you think.  Seek them out and ask their counsel and advice, odds are they will be more than willing to help you out.

I hope that this small, yet strongly worded advice letter is enough to make the pundits quiet down about the constant gloomy rain clouds that I seem to make appear whenever they read my letters.  If not, so be it, but just remember to stay positive.  Debt is not some abstract monster that is invincible.  In fact, you control debt much more than it controls you.  If you are able to remember that simple fact and put it into action you will be out of it in no time.

As the Debt Reduction Doctor it is my job to prepare you, my patients, for life in the cold financial world.  One of the things I am constantly warning people of is the trap of long-term bonds.  Generally, the longer term bond the higher the risk, so always be ready and wary when looking into such ideas.  With the state of the United States economy right now there is little doubt that the government is going to need ways to get our country back on track, and over the next ten years it is expected to be borrowing somewhere in the neighborhood of $8.5 trillion. That, my friends, is a lot of doughnuts.  To make matters worse, the government was already in a tremendous amount of debt as it is.  Now economic deficits are not always a terrible thing for an economy, but these are big time numbers.  So, what must you do as an individual to make sure that you can remain financially secure even when the government isn’t?

First off, do your homework.  The government is looking at huge debt levels for years to come, as a recent study stated that the Obama Administration predicted at least a trillion dollar deficit by 2020, still an outrageous number.  This year alone they are borrowing over $1.6 trillion, which equals out to around $15,000 a household.  These massive deficits certainly pose some problems for personal wealth and well-being, but there are ways that you can fight them off, or at least protect yourself from them.

Long-term bonds, as I mentioned before, are high risk factors in an inflated economy such as ours right now.  While they offer a high risk, high reward mentality, the risk factor is too high right now and the reward is not nearly enough.  It would be downright foolish to enter such a high risk contract when the potential reward is not even close to equaling the level of risk.  With expected inflation in the economic future, these bonds may quickly become more trouble than they are worth, meaning you should do your best to stay away from them for now.

One other way you can keep yourself clear from the United States economic roller coaster is by investing your funds elsewhere.  There are literally hundreds of other countries around the world where your money might be more secure.  Now, I am not saying run out and invest all your money in a random Turkish company, but it may be something to look into for the future.  As the value of the U.S. dollar depreciates in comparison to its competitors, having some of your investments locked up in other forms of currency may not be such a bad idea.

High risk living is one of the things that gets many people into trouble.  The higher the risk the higher the reward they generally say, but in many cases the potential reward is not worth the risk.  Now, I am not here to tell you which are the riskiest investments and which are the most secure, that is your assignment, but I am saying that positive investments are a great way of keeping yourself out of debt.  Remember, debt free living is what we all should be striving for, and this may be a very helpful way to achieve that.

I am often asked what life is like without debt, or what life would be like if one didn’t have to constantly worry about making payments on accounts that are racking up high levels of interest and causing serious levels of stress.  The answer I almost always give is the same, find out for yourself!  Now, obviously this is no easy task and we have spent hours already discussing different ways of escaping debt and living a debt free lifestyle.  This, however, is a different question.  Today’s economy leaves much to be desired, and more people are in debt now than ever before in the history of this country.  This means that almost every other person you see on the street is worrying about the same things you are in the dark of the night, and while this does seem slightly spooky, it is also very reassuring.

Debt is something that nobody can escape, and unless you are a professional athlete or Bill Gates, debt is something you are almost guaranteed to face at some point during your life.  There are many different kinds of debt, and the kind you face may be different than that of your neighbor, but the bottom line is that you owe money that you previously borrowed.  In fact, many people willingly get into debt because they know it will provide them with a product they desperately need.

Avoiding debt is certainly something you want to try and commit to, but sometimes getting into debt has a positive long term effect.  A perfect example is a loan to purchase either a house or car.  These are both very large expenditures, but both will drastically improve your life.  Owning a home is much more financially stable than renting an apartment, and driving a car is much more convenient than taking the bus.

However, to achieve either of these goals you must take out some sort of loan, putting you instantly into debt.  Now, does that mean that these were purchases you should not have made since the result was a high amount of debt?  Of course not, in fact it is almost unanimously encouraged by any financial expert anywhere that purchases such as these will have a positive impact on your life.

In the case of home ownership, it is one of the wisest investments you can make.  The value of land rarely depreciates, and if you keep making improvements and upgrades on your land and/or house, it will be worth much more if and when you try to sell it.

Now, owning items such as these are going to put you into an amount of debt that may make you raise your eyebrows at first.  However, this is a fact of life that you simply cannot avoid.  The important aspect of this life is to continuously analyze and study your budget so the debt doesn’t spiral out of control.  Make sure to keep a close eye on your spending habits and you will notice that these are forms of debt that definitely result in a financial upgrade.

The economic state of the country right now is difficult to say the least.  People are having to spend more money on products but are making less in return.  As costs rise and incomes lower the state of living becomes much more difficult, and people are facing an economic crisis.  One of the major contributing factors to this economic climate is debt.  When people don’t have enough money to survive they are forced to borrow, leaving them in even worse shape than before.  The more people continue to borrow the deeper they dig themselves into a financial hole that can be almost impossible to get out of.

I have spent many an article explaining different ways of how to get out of debt.  From saving money to investing, there are tons of ways that you can escape debt and begin to live a financially secure lifestyle.  However, with the economy in the shape it is currently in it becomes a much tougher task.  I would of course recommend staying away from debt as much as possible, but what if that becomes impossible?  If you are left with no choice than you must take out a loan or begin to use a credit card with a little more consistency.  This leads to high levels of debt as well, meaning that not everybody who is struggling with debt is financially irresponsible.

Over my course of time as the Debt Reduction Doctor I have run into many a person who
lives a fiscally responsible lifestyle and does their best to save, all the while staying away from hazardous credit cards or outrageous loans.  Then, all of a sudden, when the economy takes a hit they are immediately forced to go back on all the responsible behaviors they have worked years to maintain.

You may be one of the millions of Americans who is sitting at home stressing out over your current financial situation.  Odds are, if you’re reading this article you most likely are.  However, this does not mean that you are necessarily a financial risk.  Very often things simply don’t work out, and you are stuck in reverse trying to figure out just what in the world happened to you.  If you face debt now due to some extenuating circumstances than you may not need a drastic financial life change to get out of debt.  It may just be a product of the time we’re currently living in.

Many people feel that if they are deep in debt it is their own fault, and that they must have done something wrong to put them in such a predicament.  It is important to realize however that this isn’t always the case.  If you have lived a financially stable life for years and have only recently had to turn to loans and debt to get by, you are not alone.  You may not need to alter your spending choices in a dramatic way to get out of debt once the economy swings back upwards.  Always remember to stay positive and think things out clearly as this is going to be your best choice in a situation like this.

Overall, debt does not equal failure, especially in today’s world.  Always take some time to stop and consider your situation before you try and make a dramatic overhaul that could put you in worse shape than you were in the first place.