Digging Yourself Out of DEBT

First a little story that you may or not be able to relate to: an acquaintance of my wife and I always had the reputation of being rich. He never worked. I mean never. I'd be toiling away in the salt mines trying to save and support my family and this guy would be off reading a newspaper. I always figured, "More power to you." This went on for over 20 years. Then one day the proverbial sh*t hit the fan: turns out that for all those years this guy was leveraging his property with various banks for several lines of credit. He'd take money from one bank and pay off a bit of his debt at another. Like I said this went for decades -- he'd just rotate from bank to bank -- until finally the banks (they were European banks) wanted their money back. This guy wound up selling most of his property to pay off his loans and he has a long way to go. This guy is now in his late 60s and in Italy, your debt gets passed on to your kids -- so obviously his two children are less then thrilled with what is waiting for them.

Um...sorry if there's no happy ending to this tale. The point here -- if there is one -- is that lot's of people do what this guy did (in one form or another) and wake up one morning facing incredible debt and not a lot of options to get out.

What would you say if I told you that the average minimum monthly credit card payment is a whopping $568.00 (Kiplinger's Personal Finance Oct 2006)? Are you chuckling because you pay more? We're not talking about a mortgage here; folks were talking about monthly credit card balances.

Carrying a credit-card balance from month to month is one thing. But you know you're in over your head when you have trouble making even the minimum payment on your credit card or cards.

A lot of times the solution isn't any more complicated then working out better terms with creditors or consolidating your debt with a home equity loan. The important thing say experts is to recognize a problem exists and then set out to do something about it. Here's a brief lowdown: