It is important to try to improve your credit rating. Paying off debt on time should be seen as a vital part of keeping your financial affairs in order. Often, people will fail when trying to improve this rating because they think that taking out more credit or different types of credit will help. In reality, planning and budgeting are the key to improving your credit rating and many people find this a lot less appealing than taking out another credit card. However, the truth is that there is no substitute for paying your bills on time, and paying them off as quickly as possible.

Budgeting is the Key

Often people lose track of their finances because they’re not managing their money properly. Setting a simple monthly budget will shed light on the actual state of your finances and provide a guide on what you can or cannot afford.

Don’t make purchases on credit, even if you see an item that has been discounted and think that it’s a good bargain. If you put this on your credit card but do not pay the full balance when the bill arrives then, due to interest charges, the item will work out to be more expensive than you think.

Short and long term budgeting are crucial when trying to improve a credit score and get out of debt. Once you make these plans, you need to stick to these budgets and not deviate. Work out what your monthly income is and also your fixed monthly expenses. By doing this, you can calculate what your disposable monthly income will be. These short term measures can allow you to make longer term plans, such as saving up to pay cash for larger purchases such as vacations, Christmas gifts, or furniture. When you quit putting puchases on credit and pay down the debt you already have, your credit score will gradually improve.

Spending Money You Don’t Have?

Although the overall level of personal debt has gone down during 2010, many of us are still too careless with our credit cards. Spending money you do not have is extremely damaging to a credit rating. Credit cards allow people to spend money they do not have because a credit limit is set by a number, not actual money in the bank. People spend 15-20% more when using credit than when using cash, so it is best to pay with cash. Some people take out numerous credit cards and use one credit card to pay off debt on another one. For obvious reasons, this is not a smart thing to do.

Probably the most important thing you can do to improve a credit rating is to pay bills on time. Credit agencies will see it as a big black mark against you if fail to pay bills on time. This will have a very detrimental effect on your rating. If you only pay back the minimum amount required every month it can be difficult to pay off overall debt.

In short, improving your credit rating is a worthwhile goal. Budgeting and being aware of spending habits will help you get there.

Colorado Attorney General Suthers today issued a list of top ten tips on how to avoid becoming a victim of fraud this holiday season.

“Nothing can dampen the holiday season faster than becoming a victim of consumer fraud,” said Suthers. “The holidays are a busy time of the year for thieves. By keeping a few tips in mind, you can prevent them from taking advantage of you and your wallet.”

Each year, the Attorney General’s Office receives more complaints on fraudulent activity during the holiday season than any other time of year. To avoid becoming a victim, the Attorney General’s Office suggests following the below tips.

1. When buying online, always know who you’re dealing with.
   Anyone can set up shop online. Confirm a store’s URL by calling. Never input financial data into a pop-up message, or in response to an unsolicited email, as a legitimate business will never ask for such information this way.
2. Keep a paper trail.
   Print and save records of all your transactions, including receipts and product descriptions.
3. Update your security software.
   Updated software includes anti-phishing features to protect against fake sites that attempt to trick consumers into purchasing or divulging personal data. Never download so-called anti-spyware products pushed through pop-up messages or unsolicited email.
4. Shop on a site that encrypts data.
   Look for the URL to begin with “https” instead of “http”. On the checkout page, make sure there is a padlock icon in the lower right-hand border of the browser window.
5. Purchase gift cards from a customer service agent not from display racks.
   Gift cards purchased from a display rack are an easy target for crooks, who can write down the card numbers and wait a few days until the card is actually purchased and activated. They are then able to go online and start shopping with your card.
6. Check a company’s history with the Better Business Bureau (BBB).
   Consumers can easily inquire with the BBB to check a company’s reputation and history of complaints.
7. Give wisely and beware of charity fraud.
   During the holiday season, charity fraud is most popular. Be careful of charities that use similar sounding names as legitimate charities. Consumers should check the registration status, financial statements, and campaign reports of charities and paid solicitors BEFORE making any charitable donation. Carefully review account statements and credit card activity.
   Detecting fraud early increases your chances of recuperating your money from unauthorized purchases.
8. Protect your credit card numbers.
   To prevent fraudulent charges, make sure sales clerks make only one impression of your credit card and never give your credit card number to someone unsolicited.
9. Beware of emails that offer loans or credit.
   Scam artists can take advantage of cash-strapped consumers over the holidays by offering ”bad credit loans“ for an upfront fee.

You’re not alone. Many people face financial crises at some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or simple overspending, it can seem overwhelming. But often, it can be overcome. The fact is that your financial situation doesn’t have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation loans, or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Developing a Budget
The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.

Contacting Your Creditors
Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.

Dealing with Debt Collectors
The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn’t approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.

Credit Counseling
If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or pressure consumers to make large “voluntary” contributions that can cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Auto and Home Loans
Your debts can be secured or unsecured. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.

Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can’t do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You’ll avoid the added costs of repossession and a negative entry on your credit report.

If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you’re acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.

If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who’s having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency near you.

You may be tempted by ads and websites that guarantee instant loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, that could be a tip-off to a rip-off. If you’re asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you’re dealing with a scam artist. More than likely, you’ll get an application, or a stored value or debit card, instead of the loan or credit card.

The Signs of an Advance-Fee Loan Scam

The FTC says some red flags can tip you off to scam artists’ tricks. For example:

• A lender who isn’t interested in your credit history. A lender may offer loans or credit cards for many purposes — for example, so a borrower can start a business or consolidate bill payments. But one who doesn’t care about your credit record should give you cause for concern. Ads that say “Bad credit? No problem” or “We don’t care about your past. You deserve a loan” or “Get money fast” or even “No hassle — guaranteed” often indicate a scam.
• Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.
• Fees that are not disclosed clearly or prominently. Scam lenders may say you’ve been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.It’s also a warning sign if a lender says they won’t check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they’re hiding.
• A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
• A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company’s phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.
• A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
  A lender who asks you to wire money or pay an individual. Don’t make a payment for a loan or credit card directly to an individual; legitimate lenders don’t ask anyone to do that. In addition, don’t use a wire transfer service or send money orders for a loan. You have little recourse if there’s a problem with a wire transaction, and legitimate lenders don’t pressure their customers to wire funds.Finally, just because you’ve received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don’t assume it’s a good deal — or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it’s really important to do your homework.

Finding Low-Cost Help for Credit Problems

If you have debt problems, try to solve them with your creditors as soon as you realize you won’t be able to make your payments. If you can’t resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit.

Where to Complain

If you think you’ve had an experience with an advance-fee loan scam, report it to the FTC.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

These operations appeal to younger consumers, people with limited understanding of finances and those who are deep in debt. According to the FTC, payday lenders usually look for people who are high in debt or have a history of using high-risk lenders.

Here is a typical example of how it works: the borrower requests a loan for a short period of time, usually one to four weeks. They provide the lender with proof of employment and identification. In exchange for cash, they leave a postdated check with the lender that includes the “payday lending fee”. The cost might seem low because the borrower paid $115 to borrow $100 for two weeks. While this may not seem like much, if you calculate the loan cost in terms of APR (Annual Percentage Rate) that $15 explodes to 360 percent interest.

If the borrower continues to have financial problems and cannot pay back the loan as promised, the interest keeps building and so does the debt.

The Federal Trade Commission’s recommendation is to avoid payday lenders. Here are some safer options :

• Avoid the need to borrow in the first place by building up an emergency fund.
• Ask for a pay advance from your employer.
• Request additional time to pay the bill from your creditors.

Becoming aware of your options before you need a short-term loan is important. Remember that spending more than you make is ALWAYS a trap, and payday or cash advance loans are an expensive solution to a money management problem.

You may be tempted by ads and websites that guarantee cash loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, that could be a tip-off to a rip-off. If you’re asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you’re dealing with a scam artist. More than likely, you’ll get an application, or a stored value or debit card, instead of the loan or credit card.

The Signs of an Advance-Fee Loan Scam

The FTC says some red flags can tip you off to scam artists’ tricks. For example:

• A lender who isn’t interested in your credit history. A lender may offer loans or credit cards for many purposes — for example, so a borrower can start a business or consolidate bill payments. But one who doesn’t care about your credit record should give you cause for concern. Ads that say “Bad credit? No problem” or “We don’t care about your past. You deserve a loan” or “Get money fast” or even “No hassle — guaranteed” often indicate a scam.
• Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.
• Fees that are not disclosed clearly or prominently. Scam lenders may say you’ve been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.

  It’s also a warning sign if a lender says they won’t check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they’re hiding.

• A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
• A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company’s phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.
• A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
  A lender who asks you to wire money or pay an individual. Don’t make a payment for a loan or credit card directly to an individual; legitimate lenders don’t ask anyone to do that. In addition, don’t use a wire transfer service or send money orders for a loan. You have little recourse if there’s a problem with a wire transaction, and legitimate lenders don’t pressure their customers to wire funds.Finally, just because you’ve received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don’t assume it’s a good deal — or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it’s really important to do your homework.

Finding Low-Cost Help for Credit Problems

If you have debt problems, try to solve them with your creditors as soon as you realize you won’t be able to make your payments. If you can’t resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit. 

Where to Complain

If you think you’ve had an experience with an advance-fee loan scam, report it to the FTC.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

At this point in our journey out of debt, my husband and I had paid off a couple of smaller debts and were pressing forward on the larger ones.  We came to realize that “pressing forward” often meant one step forward, two steps back, but we were determined to finish the job.

We had many reasons for wanting to get out of debt, but one of the greatest was my desire to be a Stay-at-Home Mom.  We needed both our incomes to make all our monthly payments, and that meant I had to keep working.  We had a great babysitter for Bub, but that wasn’t the same as being home with him myself.

On top of that, we wanted another child, but the thought of leaving a new baby with the babysitter was very. . .upsetting.  If we could pay off our debts, we could get by on my husband’s salary and my part-time job teaching online classes–and I would get to stay home with the kids.  That was an extremely powerful motivator.

I wanted another baby in the worst way. Bub wanted a baby brother in the worst way.  I can’t tell you how hard it was to hear him pray for God to send him a brother, knowing that one wouldn’t be coming any time soon.  All because of our STUPID DEBT!  I started to get mad at the bills (in a good way).  I saw them as thornbushes standing between me and my second child, and I wanted to hack them away as fast as possible.

So we kept hacking away.  Another bill paid off.  Then another.  Now the car payment was the only debt left. Unfortunately, it was also the largest.  But we kept on hacking.

What we really needed was a better tool to hack with. More on that next time.

Note: This is Part 4 of my “Get Out of Debt” Journey series. You can find the other posts in the series here.

My husband and I had finally gotten serious about getting out of debt and had been slowly making progress for several months. Although we faced the usual difficulties that come with living and breathing, we soon discovered that the biggest obstacle was ourselves. Our own enthusiasm and motivation were starting to fade, and we were getting a little sloppy about sticking to our budget. We needed a support system to keep us on track.

At the time, I was participating in an online forum that focused on credit cards and consumer debt. The folks on that message board gave me another set of accountability partners, in addition to our classmates in Financial Peace University (FPU). Having a support group is extremely important to anyone pursuing a long-term goal, whether it’s weight loss, getting out of debt, or getting a college education. The great thing about the online forum was that many of the posters were further along in the process than I was, so I got to seem them do a “victory dance” when they finally paid off that last bill. It was very motivating.

Sometimes I had to post messages to my online friends to psych myself up. Here is one post of mine from 2004 to show you what I mean:

“Before now, we’ve been making extra payments willy-nilly, then slacking off every time something came up. Problem is, something’s always gonna come up. But starting now, we’re getting lean and mean.

No more eating out every time we get tired. We’re putting $100 a month in an envelope for “blow money.” When it’s gone, no more fun and games until next month.

The Dodge Neon needs a new air conditioner. It will have to wait. I only drive five miles to work, and I can stand to be hot for ten minutes. Fixing it will be our reward once the other car is paid off.

The Ford Taurus could use some dent repair and a new paint job. Tough. It can wait until the credit card debt is all paid off.

No more using the Emergency Fund for non-emergencies. I have about $200 in my Paypal account that we can use for Christmas. Any other non-budget items will have to be negotiated at a family conference. According to the snowball calculator, we can be debt free (except the house) in about 18 months. Yippee! Now for the hard part–DOING IT!”

We had a couple of smaller bills that we were able to pay off within a few months. It felt so good that I took one “Paid in Full” receipt and hung it on the refrigerator for several weeks. It made me smile every time I looked at it.

But I also had a much bigger motivator to keep me going.  I’ll tell you about it next time.

Note: This is Part 3 of my “Get Out of Debt” Journey series. You can find the other posts in the series here.

At this point, we had our starter emergency fund ($1000) in place and were ready to tackle Baby Step #2 in our Dave Ramsey-style Total Money Makeover. We had figured out a budget that more or less worked for us, and were excited to have finally made some progress.

In FPU class, Chet and I learned about the Debt Snowball process. The idea is this: Make a list of all debts except the mortgage, smallest to largest. Throw as much money as possible at the smallest debt until it’s paid off, making only minimum payments on the others. Once the smallest debt is paid off, take the money you had been spending on that payment (plus any other money you can find) and attack the second debt. Repeat until all debts are paid off.

The idea is very simple, but very effective. It was extremely liberating to have a step-by-step plan to focus our energies, instead of spreading it out over several different goals. It helps you stay motivated and not get overwhelmed by a dozen different financial goals you “should” be pursuing. Instead of a dozen, we had ONE goal–one bill to pay off. All our extra time and money went toward that ONE tiny goal. When it was done, we moved on to the next one.

The process was simple in theory, but difficult in practice. For example, the air conditioner gave out in my car. Do we shell out $450 to replace it so I can be comfortable on my ten-minute commute to work, or leave it alone until we get some bills paid off?

We lived in a new house with no automatic garage door openers. Do we buy some, or keep paying off debt, grit our teeth and keep manually opening the doors for a while? In the past, I’d have been looking for low interest loans online, or charging up the credit cards. But this time I was determined things would be different.

When I came home from work tired and didn’t feel like cooking, should I dip into the debt snowball money for a nice restaurant meal, or just suck it up and cook something?

People often criticize Dave Ramsey for advising people to pay off smaller bills first instead of bills with the highest interest rate.  It doesn’t make sense until you follow a family through the process.  We need to feel those little wins, especially in the beginning.

The fact is, getting out of debt was a tough slog for over a year. We were working extra jobs and selling stuff, but not getting to “enjoy” the money. It all went to paying off bills, or at least that was the plan. Sometimes we messed up. Sometimes we gave in and blew money that had been budgeted for something else.

But we got back on the wagon and kept trying. I tried to find ways to get excited again when the initial “rush” started to face away. More about that next time.

To quickly recap Part 1, my family was $25,000 in debt with no savings, and seriously stressed out. Chet and I had enrolled in Financial Peace University, and were excited about the prospect of becoming debt free. 

Our first class got us even more motivated. We met others who were in similar circumstances . . . some a little better, some a little worse. Our instructors had recently completed the class themselves. They explained that the concepts had greatly improved their lives and hoped the same would happen for us.  Then we watched the first video. Dave Ramsey gave an overview of the program, and we learned that our class would consist of seven Baby Steps. Step One was to get $1000 in the bank for a starter emergency fund.

Dave told us we needed to  put $1000 aside within one month. At the time, I thought he was crazy. We could barely pay all our bills, so how could we come up with another thousand bucks within a month? Then Dave told us how to do it. Sell a bunch of old stuff. Work extra hours or take a second job. Cut expenses. Or preferably all of the above.

So we did just that. We had some college textbooks lying around that we sold on Half.com. I took a second job teaching for the University of Phoenix. Chet taught summer school. We got on a written budget and cut back on expenses like eating out. I started clipping coupons and stockpiling groceries when they went on sale.

Within a month, we had scraped up $1000. We were proud to report to our classmates that we had completed Baby Step One. Now we could get serious about attacking the debt. Or so we thought.