Mount Blackburn in Wrangell-St. Elias National Park

Cash Flow/Wise Debt Management

Reducing debt takes commitment, patience

While employment rates and stock prices have been dropping, one thing has kept going up in America: debt. The trend began in the 1990s, when the rate of personal bankruptcy in the country rose by nearly 70 percent, and it continues today. Regardless of the cause of debt - the most common is misuse of credit - there are steps you can take to manage and overcome it.

There is no quick fix — getting out of debt requires time and effort

  • Take control. Review your records to determine levels of income and expenses. In one column, list all reliable monthly income, such as salary, pension, or unemployment payments; add average amounts for additional, less consistent sources of money. In a second column, list all expenses. Start with major costs, like mortgage or rent, utilities, food, transportation, credit card payments, etc. Remember to include expenses that happen other than monthly, like property taxes and insurance. Refer to bank statements and purchase receipts; don't overlook cash expenditures.

  • Create a budget. Based on income and expenses, set up a budget that allocates monthly amounts for all categories of spending. Eliminate unnecessary costs: eat at home rather than dine out; rent movies rather than go to movie theaters; cancel cable television service. Develop a plan to pay off credit cards, especially those with high interest rates. It's often a good idea to include the entire family in the budgeting process since it will define the scope of their purchases and activities.

  • Improve the Balance. Re-examine the numbers, looking for ways to increase income and further trim expenses. Can another member of the family take on a job? If you are renting, is it feasible to move to less expensive housing? Determine if you are eligible for government programs, such as unemployment benefits, food stamps or housing programs. The Credit Union National Association (CUNA) provides an online calculator to help you with financial decisions. Go to the CUNA Web site at

  • Contact your creditors. Speak directly with the organizations to which you owe money. They may be willing to arrange a payment schedule that enables you to temporarily reduce monthly contributions. If you own your home, ask your mortgage company about a forbearance agreement, which can lower or eliminate payments for a set period of time.

  • Seek professional help. You may opt to get help with your situation rather than handling the details yourself. Assistance is available for little or no cost through government programs or credit counseling services, which will work with you to develop a long-term plan to pay off debt, but may have implications on your credit history. You may want to consult a financial advisor for input and advice. Ask friends and relatives for recommendations on advisors or contact professional associations, such as the Financial Planning Association.

  • Avoid predatory lending and money-making schemes. Some lenders may prey on your vulnerability, offering easy credit at exorbitant interest rates that can push your financial situation to a critical point. Beware of "sure fire" investments that promise quick returns; if something sounds too good to be true, it probably is. Stick with reputable professionals.

    Additional Resources:


  • Consumer Credit Information, FTC brochures online at
  • "Credit and Your Consumer Rights," Federal Trade Commission (FTC) brochure online at
  • "Job Loss", National Endowment for Financial Education brochure online at
  • "Knowing and Understanding Your Credit," Fannie Mae booklet available by calling 1-800-688-HOME
  • "Prioritizing Debt: Which Bills do I Pay First?" Northwest Justice Project brochure online at

Web sites

  • Financial Planning Association (
  • Internal Revenue Service (
  • National Endowment for Financial Education (

    This info about reducing debt provided by the Certified Financial Planner Board of Standards, Inc.


June 2003 - four great web sites for you

Guide for Late Savers by National Endowment for Financial Education® (NEFE). New online resource “ Guidebook to Help Late Savers Prepare for Retirement”. User-friendly. Outlines more than a dozen catch-up strategies – especially for those 50 and older – who have realized they haven’t saved enough for retirement. 5 sections.
“10 Steps to a Better Financial Future” by AARP (American Association of Retired Persons) has developed interactive CD-ROM targeted to pre-retirees (age 40-60) with limited or no knowledge of personal financial issues. 10 modules. CD is free with $4.50 shipping charge. Order information on web site.
The Economic Education Newsletter is an online education resource for K-12 teachers provided by the Baltimore office, Federal Reserve Bank of Richmond. Features information on high school and college contests, teachers’ workshops and other education programs. Offers web links to financial literacy. Can view previous newsletters or subscribe.
The Annie E. Casey Foundation (AECF) has launched a Family Economic Success (FES) website to provide a more comprehensive way to address the difficulties low-income working families face in trying to move up the economic ladder. FES uses a three-pronged approach, using strategies for workforce development, family economic support, and community investment. The website offers information on a range of topics for helping families and communities to build strong financial futures for practitioners, researchers, policymakers, and the general public.

e e cummings wrote:

"I'm living so far beyond my income that we may almost be said to be living apart."