QI am a single, middle-age female with a significant amount of debt. I am paying on it, but wondering if I need to look at a different way to handle this. I have $40,000 in bank and credit card debt. I called all the creditors and negotiated interest rates and was able to get all them to decrease the rate except one, which I am still working on. Should I be doing something else? The interest rates are between 3 percent and 9 percent with the high one at 23 percent. I have recently looked at the debt relief programs ... are they a good option? I have my house payment that has been modified and can handle that OK.


AYou're doing a good job dealing with your debts, especially since you've negotiated down the interest rate on most of the loans, from credit cards to home mortgage.

I do think it's always helpful to check in with someone who has seen a lot of debt workouts to get some additional ideas. Sad to say, with more and more people struggling to get out from under large debt burdens, the scamsters and fly-by-night operators are out in force. That's why I usually recommend getting in touch with the National Foundation for Credit Counseling (www.nfcc.org). It's the largest national nonprofit credit counseling organization. It's been around for a long time and it's a legitimate organization. In your case, my guess is that the best use of the service would be to consult about your budget and finances, but you could see if joining a debt management plan makes sense.

The United Way and a number of churches also make personal finance referrals and services.

However, since you've already negotiated down your debts, my best idea is to get a copy of "Reduce Debt, Reduce Stress,'' by Gerri Detweiler, Nancy Castelman and Marc Eisenson. It offers practical advice and examples. For instance, you might want to try a debt roll-up. The basic idea is to pay the minimum on all your debts except the highest-rate one. That's where you target your extra debt-reducing savings. Eventually, that debt is gone. You then attack the next-highest-rate debt, and so on.

The combination of consulting with a professional and working with the book should allow you to come up with a realistic plan for getting out of debt (excluding your primary home mortgage) within five years -- hopefully much sooner. By the way, if the numbers don't work within a five-year framework, then I would investigate bankruptcy. It's a last resort, but it's also a way to get a fresh start.

Chris Farrell is economics editor for American Public Media's "Marketplace Money." Send questions to cfarrell@mpr.org.