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Education key to debt reduction: Consumers learn strategies through games, workshops

From the February 16, 2008 edition, The Atlanta Journal-Constitution, Buyer's Edge Section, Page FE1.

By H.M. Cauley

The holiday season is over, but more than the memory lingers for many buyers around the metro area. The reminder: Credit card bills that don't seem to get any lower. And it's not just consumer spending that has many staring at a mountain of debt.

"It's a combination of a lot of things," said Mechel Glass, director of education for the Consumer Credit Counseling Service. "In the climate right now, we're seeing a combination of holiday debt, medical debt and people having trouble paying their mortgage due to layoffs. We're still in a housing crunch right now where people are concerned about interest rates going up on their loans."

Many of the people Glass sees at CCCS's downtown Atlanta offices are in dire straits that might have been avoided through education, she said.

Many of the lessons are simple enough to teach to children as well as adults. To get the message across, Glass invented a game called Beat Debt that shows people ways to pay down debt. She's also the creator of Paid Off, a card game with the same objective. Last year, she sold the games and her company to CCCS.

"I was teaching workshops on how to start your own business, on personal finance and how to live on less and save for the future," said Glass. "But I wanted a way to reach more people. My passion is helping people to get out of debt."

"With the board game, every player has a certain amount of disposable income you use to build savings and pay down debt," said Glass. "When you land on spaces, you get funds and decide what you're going to do with them. You may get a debt card that says you need $200 to fix a flat tire and if you don't have it, you put it on a credit card. That's exactly what most people in America do --- they pull out the credit card and hope they can pay it off next month. They're really subsidizing their expenses."

Anyone faced with significant debt knows it's no game trying to get back on track. There are constant obstacles that Glass hears about every day. "I teach seminars where couples say, 'Somebody's running up the credit cards; how can I get them on board to get out of debt and have a safe financial future?' Or, 'Our teenagers tell us they want new jeans or an iPod.' The important thing is that everybody learns that there's a new way to spend money --- and it doesn't involve pulling out the credit card."

Just how you start making a dent in debt depends first on how much you've accumulated, said Glass.

"If you've got one credit card with a $2,000 balance and are gainfully employed, you could tackle it in two or three months just by denying yourself those little expenditures --- stopping for fast food, eating out, going to the movies," said Glass. "So many people say they don't have extra money, but if they look at what they spend in a 30-day period, most find they are eating their disposable money by not cooking dinner at home or taking their lunch to work. They use vending machines and pay for those morning cups of coffee."

Another approach is to study monthly expenses and see if there's any way to lower them. "I'd start first with your phone," said Glass. "Do you really need all the options you're paying for on your home or cellphone? I personally called the phone company and asked how to lower my bills and they bundled my services to save me $50 a month."

When it comes to gas bills, consider competitors. "There are Web sites that tell you what different companies charge," said Glass. "And you can ask your provider if they have a budget plan. In fact, ask everyone you pay if there's a way to lower your bills."

Beyond lowering monthly payments or increasing your income, there aren't many options when it comes to climbing out of debt.

"How do you increase your income?" asked Glass. "Do you work extra hours, ask the boss for a raise, or work extra hours over the holidays? You might even take a second job and use all that money toward paying down debt."

And if you need professional help, contact CCCS. Trained counselors work with debtors to get their finances in line. The group conducts free "Web-inars" where consumers can ask specific questions to experts online. There are also counseling hotlines where consumers can ask questions or schedule an appointment at one of the local CCCS offices. For information about CCCS, go to www.cccsinc.org or call 1-800-251-2227.