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Financial Debt: Still hope for those trying to dig themselves out

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CHICAGO (FOX 32 News) -

Americans are still battling for economic stability since the end of the recession. More than a third of the country is in trouble when it comes to paying debts on time, but the bigger problem is getting out of it.

Debt can come from a variety of reasons, but for many it's because they lost a job or had a loss in income. For others, though, they're just spending money they don't have. And while for many their financial futures look grim, there is a way to get out of the hole.

We live in a nation where it's spend, spend and spend some more.

“Well, look what we do, we live beyond our means, we're freewill spending all of the time. People don't look at the consequences and before you know it you're buried,” a Chicago man said.

And the numbers don't lie.

The urban institute said that 77-million Americans with debt in collections owe an average of $5,200.

Financial counselor Ericka Silva said that the numbers are shocking.

“It is startling to see the amount of debt that continues to accumulate, but at the same time seeing clients day to day and the current economic situation, you see where there's need for further education,” Silva said.

That debt comes from anything: from credit card bills to medical bills to parking tickets, and it adds up fast.

“Usually what happens is you start falling past due with one bill and you're unable to bring that current, so you have the late fee plus the interest charges and then your next payment is double that,” Silva added.

However, not all debt is bad debt.

A mortgage can actually help your credit score, because it's considered a secure debt.

“With the mortgage debt, it's something that's backed by collateral because it's based on the house. It does help improve the credit score,” said Silva.

On average, one in three Americans have debt in collections, which is why Terri Petmezas said she always tries to pay everything in full.

“We opened some zero percent credit cards to help pay for our wedding, but I’m making sure those get paid off before they start to carry a balance and always paying the minimum on them. It's important to not pay interest, if you can avoid it,” Petmezas said.

The reason for that is because once you start to mismanage your money, it can take months and even years to get back on track.

“When you're maxed out you can't do anything, except worry so I stopped putting things on the credit card, I pay cash and I’m going to financial counseling,” the Chicago man added.

The financial councilor said that there are free resources that many people don't even know about, but the first steps to getting out of debt are to look up your credit report -- which is free online.

Also, put a budget together and seek out advice from a non-profit credit counseling agency to make payments, according to your budget.

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