Just like shopping for the best produce, there are a few key things that will help you tell the good from the rotten:

1. They won’t force you to sign up for anything. Many credit counseling services will offer free financial analysis. A good firm will never force you to sign up even after giving this free service –or any other freebie they may offer at the start.

   Laying out your financial status or your assets versus your debts is always the first step in proper money management. This is equal to knowing where you are to help you decide where you should go. You should be able to do this on your own. There are many online resources to help you.

   Consolidation companies will do this for free to make you feel special. This further lets them see the risks they will be entering into if ever you sign up with them.

2. They do not make big promises. The ads will scream how this will solve all your problems. However, good credit counseling services will never promise you that things will get better in a matter of months. They will never promise to bring your interest rates to zero. They will give you the real picture and tell you that the road to financial freedom can be a tough, uphill climb for those getting out of debt.
3. They are transparent in their fees. Commercial or for profit credit counseling services will give you a straightforward start-up fee. Non for profit debt consolidation groups will have some sort of fee described as charitable donations.

   Either way, the good counseling service will tell you how much it will cost you for them to consolidate your loan and negotiate with your creditors. They will answer your questions regarding these fees.

4. The fee they charge cost less than your debts. Some debt consolidation fees are so high that they match or cost more than your debt principal. Before signing up for the plan, do some number crunching on your own to see if you are not paying more than what you expect.

   The good credit consolidation company will make sure you are able to pay their fees. They will also see to it that it is just a fraction of the loans you owe.

5. They help you see the big picture. The job for the good credit counselor is to make sure you do not get yourself into major debt again. Non for profit debt consolidation in particular focus on helping you gain better control of your money. The good company will inspire and motivate you not to get richer but to be more financially stable no matter how much you earn.

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1. Owing and spending more than you make. A serious sign of debt trouble is having more money on credit than on hand. This means that buying on credit is more frequent than spending with hard cash. Remember credit simply signifies money that you do not have and not money that you do have. When this happens most of your savings and hard-earned money will be used to pay off debts and such habits can quickly spiral to irresponsible spending. When you buy more and spend more than you make, the math says that at the end of the year you will end up with negative income.
2. Not having or not sticking to a budget. Every good housewife knows that the best way to provide for all your needs and to have some left over for a rainy day is to budget your money and to stick to that budget as long as your income remains relatively the same. It’s alright to give yourself a break and splurge on those shoes once in a while, but when you go off budget almost every month this is already a sign to look out for. Remember not having a budget is in essence not structuring your financial habits and not prioritizing your needs, this gives you more leeway to spend on unessential stuff and is an excuse to buy more.
3. Being afraid of debt. This is already a smoking gun that tells you that you are having some serious problems with debt. Only people who are overwhelmed by their payments are those who readily deny and often worry about debt. Debt is not necessarily a bad thing if it is used well and managed properly. People who begin avoiding debt collectors and collection calls, who take all their time opening bills and reading notices, and who continue to spend too much on credit cards despite their bills piling up at home are clearly in denial of the need to take responsibility.
4. Having too many credit cards. One of the most common debts out there is the credit card debt. The reason for this is that it is unsecured and can make people feel more fiscally irresponsible. Having several credit cards and using most of these to pay for your purchases is a sign that you are getting far too comfortable with paying for things on credit and having to loan in order to buy things.

To make purchases more manageable it’s advisable to use a debit card instead of a credit card for debit purchases are automatically deducted from your account and are therefore as good as cash, or one can consolidate several credit cards into one secured credit card loan that has lower interest. You can do this through the services of a non for profit debt consolidation company.

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