Sometimes our debt exceeds our income considerably and any attempts at tweaking the budget can't cover the deficit. Before considering a second income, look at some of the alternatives to getting our debt down. Here are some of the tools people use:

Debt Pay-Down Plan
In a debt pay-down plan, you are giving each creditor a payment each month. Plan on paying off the loan with the lowest balance first. When that bill is paid off, take that amount that was being applied to that monthly bill and add it to the amount being paid to the bill with the next lowest balance. Each time you pay one off, roll that amount over to the next one. This has a snowball effect, adding momentum to the next bill, and so on, until they are all gone!

Try and surpass the minimum due if you can. Paying a little extra adds up. For example, if you had a loan balance of $3,000 and you paid the minimum each month, it could take you 30 years to pay it off. The total amount paid could end up being $10,000. If, however, you paid an extra $5 with the minimum payment, you could pay off the balance in half the time and with half the total amount paid.

If you have a savings account, many financial counselors recommend using it to pay down the debt. The reason is that savings accounts earn much less interest than the interest being charged by your credit cards. You may consider selling some assets to pay off the debt (jewelry, extra real estate, stocks, a second car, antiques, newer car for an older one).

Ask a lender if they will offer you a discount on the interest rate if you make payments automatically from your checking account. Avoid late payments on any account. The finance charges will wipe out any progress that you made on paying down the balance.

Refinance Your Mortgage
By refinancing your mortgage, you take out a loan that will cover your mortgage as well as all of your debts. This reduces your overall payments, but extends the amount of your debt over 30 years. Your debt is still there, just masked in another payment. You also lose all equity you have built up and are starting all over each time you refinance. I know people who do this regularly so that they can continue to live beyond their means. They view the lower payments as an excuse to go spend more. When they retire, they will have a rude surprise with large monthly payments to make throughout their golden years.

Credit Counseling
Credit counselors act as a liaison between you and the creditors. They may get the creditors to agree on lower monthly payments or to not make collection proceedings. The creditors tend to respond to credit counselors because they believe the debtor is serious about repaying if they have visited one, and they have come to know and trust credit counselors. Credit counselors will take your bills and your income to cover them, and be in control of both each month. You will be given an allowance to use for your other expenses.

There are some pitfalls to credit counseling that should be considered before going this route:

• Credit counseling tends to go unregulated in many states. This can leave people at the mercy of con artists who are really salesmen of high interest credit cards.

• Check to see if the credit counselor is certified by the National Certification Board of the National Foundation for Consumer Credit (800) 388-2227

• The credit counseling fee should be no more than $10-25 per month, since they are usually funded by banks or other organizations.

To find a credit counselor in your area, call the Consumer Credit Counseling Service (CCCS) for an office nearest you.

Bankruptcy
This is not an option that I would encourage, since I believe that we need to be responsible for ourselves and our actions. However, many feel they are cornered, and, according to the National Bankruptcy Review Commission, more than a million households file for bankruptcy each year. And the number rises each year. Most causes for the bankruptcy were listed as medical debt from uninsured people, and credit card debt.

Bankruptcy is often referred to as filing Chapter 7, 11, or 13. Let's look at each type. Chapter 7 is a liquidation of all assets and distribution of the money to the creditors. All debts are discharged, whether or not threw as enough money to cover the debts. Occasionally a portion of the home equity is spared, but a lawyer can explain your situation best. This action gives the debtor a fresh start. This works for most debts, but does not cover debts for:

1. child support or alimony
2. taxes owed for the past 3 years (older than 3 years are covered)
3. student loans
4. money owed for intentional and willful misconduct
5. secured debts (like home loans)

Chapter 11 is a reorganization of finances usually used by businesses, but can be used by individuals. Chapter 11 allows the debtor to remain in control of all possessions and businesses, and continue to manage the estate himself, all while working with the creditors. This is very expensive with filing fees and lawyers and can take several months to settle. The goal of Chapter 11 is to settle on a repayment plan with your creditors. This can usually be achieved with less money and take less time by filing Chapter 13.

Chapter 13 is another form of reorganization. It repays all debts in full, but allows you more time to do it. By filing Chapter 13, you can get up to 60 months to repay existing debts. You are given a trustee whom you give one amount for all of the debts each month and they distribute the payments. In order to file for Chapter 13, you must have a steady income, and your unsecured debts (credit cards) must not exceed $250,000.

Since any of these are a serious step to take, and laws vary in states, consulting an attorney before making this decision is essential. Keep in mind that a debtor who files bankruptcy has damaged his credit rating for up to ten years. This is in addition to the emotional turmoil it creates for you. For more information on bankruptcy, contact the Bureau of Consumer Protection - Office of Consumer and Business Education at (202) 326-3650.

Getting out of debt is hard work, just like dieting is hard work. It has to be done day by day and it takes time. There are no quick fixes. Pick a goal and keep working at it faithfully every day. You can do it!