Freedom Debt Relief Offers 9 Tips to Keep to Get-Out-of-Debt Resolution

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Priority-setting, organization help Americans stick to debt-reduction goals in 2012

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Getting out of debt is one of the most time-honored resolutions. Try these nine tips to stick to a get-out-of-debt resolution.

With up to 88 percent of individuals failing to keep their New Year’s resolutions, now is the time for those who resolved to reduce debt in 2012 to stay motivated, according to Kevin Gallegos, vice president of Phoenix operations for Freedom Debt Relief (FDR).

“Getting out of debt is one of the most time-honored resolutions each year,” said Gallegos. “It’s a resolution that makes sense, as the average American household that carries credit card debt owes nearly $16,000.” Come February, though, sticking to resolutions to find debt relief can become hard.

Gallegos offered nine tips to help people stick to their 2012 get-out-of-debt resolutions.

1.    Determine your baseline. “You can’t get where you’re going unless you know where you’re starting from.” When it comes to finances and debt, the starting point is a list of everything you owe, including mortgage, credit card debts, auto loans, student loans, personal loans, payday loans, medical bills, and any overdue amounts for utilities, insurance, etc. Next, create a list of monthly income and “must-pay” expenses. These expenses include shelter, basic food, utilities, transportation necessary for your job, basic clothing, etc. The difference of income minus necessary expenses equals your discretionary income. From this amount, you must pay all other expenses – entertainment, eating out, shopping, travel, cable TV, phone service – as well as debt.

2.    Determine debt-paying priorities. Necessities such as food, shelter and utilities are most important. A vehicle may be necessary for transportation to a job. After making those payments, determine how to allocate any additional money toward your get-out-of-debt resolution. Pay payday loans first, and then credit cards. During this time, do not add to your debt. Use cash, checks, debit or electronic withdrawal from your checking account. Take credit cards out of your wallet and delete credit card information from online shopping sites. Think twice before closing credit card accounts, as this could lower your credit score by reducing the amount of available credit.

3.    Get organized. Beside each bill you listed in Step No. 1, note payment amount, interest rate and due date. Write down how much you will pay each month to each creditor. Pay at least the minimum amount on each bill. To eliminate debt, pay any extra funds you have available to one debt until it is paid off. Then transfer the “extra,” as well as what you were paying on that debt, to the next bill until it is repaid, and so on. Some people like to pay off the smallest balances first, to get the fastest sense of accomplishment. Others like to pay the debt with the highest interest rate first, in order to minimize interest fees. Choose one method and stay consistent.

4.    Get serious about expenses. It may be possible to make $100 a month or more available by carefully scrutinizing expenses, said Gallegos. That may include steps like bringing lunch from home, giving up cigarettes or alcohol, bicycling or carpooling to work, or giving up subscriptions to movie services, music services, magazines or paid websites. Store brands and coupons can help. Also make sure to avoid paying for expedited shipping or “convenience” fees. Keep notes on what you save, and apply that amount to your debt. While monthly progress may seem small, remember to think long-term; your efforts will pay off.

5.    Track progress. Use a spreadsheet – or pencil and paper – to track how much debt you have paid. Note the month and starting total balance, and update it every month. It is also a good idea to get your free credit report once a year at

6.    Pay on time. On-time payments will eliminate late fees and penalty interest rates that make debt mount faster, noted Gallegos. They also are the most important element of good credit, which will help down the road in qualifying for lower interest rates on a house or car loan. Good credit can also help with securing an apartment rental and even a job.

7.    Know when to get help. If you cannot afford your debt payments, consider getting professional help. Many sources and types of help are available. These might include credit counseling and debt management plans, debt consolidation or debt settlement (also known as credit advocacy). For those in serious debt situations for whom debt management or debt relief services cannot help, bankruptcy may be the right solution.

8.    Create an emergency fund. Put some portion of your income into savings for emergencies. Most financial advisors suggest savings should cover three to six months of necessary living expenses. But even a few hundred dollars to start can prevent you from going into debt when you face a medical bill, auto repair or other unexpected expense. If you can save as little as $25 per month, you would have $300 at the end of the year.

9.    Save. Work toward saving at least 10 percent of all income to eventually have three to six months of necessary living expense. But even a small amount can prevent you from going into debt when you face a medical bill, auto repair or other unexpected expense.

“Even if things have gotten off to a rocky start, it’s not too late to make 2012 the year to get out of debt,” said Gallegos. “Achieving any New Year’s resolution requires patience and persistence, but it will be worth it to create a better future.”

Freedom Debt Relief (
Freedom Debt Relief provides consumer credit advocacy, also known as debt resolution or debt settlement, services. Working as an independent advocate for consumers to negotiate with creditors and lower principal balances due, the company has resolved more than $1.5 billion in debt for more than 120,000 clients since 2002. The company is an accredited member of the American Fair Credit Council (formerly The Association of Settlement Companies) and a platinum member of the International Association of Professional Debt Arbitrators. FDR holds the Goldline Research Preferred Provider certification for excellence among debt relief companies.

Freedom Debt Relief is a wholly owned subsidiary of Freedom Financial Network LLC (FFN). Based in San Mateo, Calif., FFN also operates an office in Tempe, Ariz. The company, with more than 500 employees, was voted one of the best places to work in the San Francisco Bay area in 2008 and 2009, and in the Phoenix area in 2008, 2009 and 2010. FFN’s founders received the Northern California Ernst & Young Entrepreneur of the Year Award in 2008.


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Aimee Bennett
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