There’s an old saying that reminds me of how many people feel when they’re trapped at the bottom of the pit of debt. “Desperate times call for desperate measures,” or so the saying goes.

The endless onslaught of calls and bills, the ease with which progress seems to be erased, and the ongoing anxiety of not knowing when it will all end leaves many people open to just about any solution. While that openness often can lead people to adopt radical lifestyle and spending changes which truly do get them out of debt, it can also lead people to believe just about anything.

Whether it is online moneymaking scams, too-good-to-be-true debt relief techniques, or methods with questionable ethics, people deep in debt are prone to believe the outlandish promises of others.

I want you to dog-ear or bookmark this page. You are going to want to come back and reread it before you make any major decisions about innovative debt reduction techniques, get-rich-quick schemes, and ideas with legal gray areas.

Here are 10 things you need to remind yourself of over and over again, as well as some thoughts to keep you on the straight and narrow:

In the debt reduction industry, there are a lot of people promising a lot of things. Unfortunately, most of those services are a big waste of money in that they either accomplish something you could have done for free, or they don’t accomplish anything at all.

Before you sign up for anyone’s services, you need to ask yourself if it is possible to get the same benefits elsewhere for free. If you cannot, or if you are too overwhelmed to handle this piece of your debt reduction plan yourself, you need to get a company’s guarantees and promises in writing.

From the start, I’d remind you that a reputable attorney is the one place that I’d always opt for professional help, especially in matters of bankruptcy (see Chapter 18). These issues are so complex that their expertise will ensure a speedy and accurate processing of your case.

When someone promises to “eliminate your debt” I can only guess that they are one of three things: a bankruptcy attorney, a sugar daddy, or someone who is convinced they have magical powers. The reality is, people who are owed money aren’t really that keen on having their “balances” eliminated.

No amount of yelling, screaming, letter writing, or phone calls to their “internal contact” at your company will get a debt erased. A debt is what it is and can only be eliminated by one of the following methods:

The only things on the list that you can’t do yourself involve legal matters and acts of God, both of which I recommend outside help on.

The only real difference between you and a “debt negotiator” is that you don’t have your own late-night infomercial. The truth is, you are absolutely entitled to deal on your own behalf with your lender or credit card company. The company cannot deny you the right to contact them and try to negotiate your debt.

By paying someone to do this for you, you are only going to add to your costs and time associated with getting out of debt. Even if you don’t believe me, you might as well at least give it a try before you sink the money into a hired gun. Copy the debt settlement offer letter out of Appendix B and make an offer that’s 10% to 30% of what you owe.

Signing up for a “free” credit report will likely cost you a lot more than nothing, which is my definition of free. A lot of times, these companies have slick, even funny commercials that offer to provide you with a free credit report or score.

But, as always seems to happen, you start seeing a mysterious charge on your bank statement for $12.95 per month. When you finally make sense of who is charging you, and call that company offering the “free” credit report to find out why you’re being charged, you get the world’s greatest run around.

As I’ve mentioned before, there is only one truly free source for a free credit report, and that is the credit reporting agencies themselves. You can access that report at www.annualcreditreport.com.

The classic free credit report red flag that unfortunately hooks person after person is a company’s requirement that you enter your credit card number to verify your ID. Of course, somewhere in the fine print, it also says that they’re going to bill the credit card from here to eternity for some service you never wanted in the first place.

When a company offers to protect your credit, backing it with a million dollar guarantee, you need to realize that it’s all smoke and mirrors. Besides an occasional e-mail telling you that something has changed on your credit report, most of these companies don’t do anything to justify a fee that may be $20 to $50 per month.

In fact, their bold promise to protect you for up to a million dollars worth of damage is a load of marketing manure. By law, your lenders cannot hold you responsible above minimal amounts for charges and loans you did not authorize. Its million-dollar promise does nothing more than refer you to the legal protections already in place for every consumer.

Remember, you can check one of your three credit reports for free every three to four months by visiting www.AnnualCreditReport.com.

As I mentioned in Chapter 20, the only cure for a lousy credit score is time. Everything except bankruptcies and government liens drops off your credit report after seven years. Someone who promises that he or she can get these things to drop off earlier is selling you a promise he or she can’t deliver.

Additionally, any errors or discrepancies you find on your credit report can easily be handled by you over a couple of lunch breaks. Under the new laws of the last few years, both lenders and the credit agencies have made it much easier for you to contact them and dispute how something was reported or fraudulent activity.

There is no real way to repair your credit overnight, and only a few proven ways to boost your score in a short period of time. Stick to what is in this book, and you’ll have done all you can do.

My guess is that many seminars and workshops you might attend on dealing with debt problems actually provide you with some great information. The problem is, 99% of it will be the information I’ve already covered in this book.

Before you shell out $99 or more for a workshop, see if you can get a breakdown of the topics. If there isn’t new subject matter mentioned above and beyond this book’s contents, consider putting that money toward one of your balances.

The same is true for additional books about managing your debt. It’s very likely that there are other good ones out there, but they won’t really provide you with any new information beyond what you’ve read here.

I would recommend, however, picking up books on the more broad topics of personal finance, investing, and planning for retirement or your children’s college education. Each one of those topics is complex in and of itself, and deserves your full attention at some point. The Complete Idiot’s Guide series offers some outstanding books on these topics.

In case you’re wondering about the books that have meant the most to me in my own financial journey, there are three that I’d highly recommend. The Millionaire Next Door by Thomas Stanley is a demographic study of wealth in the United States. The Richest Man in Babylon by George Clason is a fun and short piece of historical fiction based around personal finance topics in ancient Babylon. Last but not least, Extraordinary Popular Delusions and the Madness of Crowds by Charles McKay takes a look at financial fads over the last 500 years. See Appendix C for details on these and other books.

Before we close the books on things to watch out for, I do want to give you some quick thoughts on the different get-rich-quick schemes I’ve seen over the years. Suffice it to say, most of these don’t work, and the only people getting rich are the ones who are trying to get you to say yes.

Whether it is makeup, vitamins, kids’ toys, candles, or cookware, most multilevel marketing businesses fail miserably. These programs ultimately rely on you to market their amazing products to your friends and family, who usually buy one or two things to be supportive and then never buy anything again.

Because the companies do not teach you how to truly sell and market, and aside from the fact that direct sales is brutally hard for even seasoned professionals, it is an almost guaranteed matter of time before you have a garage full of inventory that no one wants. Since these programs usually require you to buy some inventory on the front end or pay an enrollment fee, you end up losing that money, setting you farther behind.

Yet another one of my favorite late-night infomercials … it’s the guy who was making no money in his dead-end job, until he signed up for this great program that lets him buy real estate for no money down. Now he’s got so many checks coming in that he can’t find the time to cash them!

Really, if you could buy real estate for no money down, it’d be snapped up by people with a lot more money, resources, and smarts in real estate than you or me. Of course, by the time you figure that out, your initial fee and their money-back period are long gone. Send that money to your credit card instead of the guy on TV in the nice suit.

I’ll be blunt. I’m a former stockbroker and I’m not sure I could day-trade stocks, currency options, or pork bellies to save my life. But if you believe the commercials, anyone who knows how to use a computer can makes thousands each week.

Unfortunately, it’s just not true. Financial institutions with their supercomputers, trading programs, and huge trading staffs will almost always beat the little guy in the day-trading arena. Don’t get me wrong, I think the stock market is the way to go for long-term investments. But I wouldn’t consider buying a stock and selling it five minutes later a long-term investment.

I think it’s worth mentioning the moneymaking scams and schemes I often see people get duped into that are both foolish and illegal. Some of them are downright dangerous.

While you may find it hard to believe that people fall for some of these, it happens every day. In fact, some demographic groups like teenagers and seniors are continually being scammed because they are both relatively new to the Internet.

These e-mails border on absurd once you’ve seen a few of them, but if you’ve never seen one before, it sends your imagination running wild. What a dream come true this would be for someone who was eyeballs deep in debt!

The e-mail, which tends to originate from a foreign country on the African continent, seems to be sent from someone with a problem you can help solve. You see, they’ve got $20 million sitting in a bank account in a country that’s in the midst of a civil war or unrest. They’re afraid that if they don’t get it out soon, it’ll be lost due to the corrupt government. But, for one reason or another, they can’t withdraw the money themselves. However, they can transfer it to someone else’s bank account. If you would be willing to accept the transfer, they’d be willing to give you $5 million of the money. You’ll then transfer the rest to their Swiss Bank account. What a deal!

This is actually a scam that has not only ripped off Americans, but also gotten them killed. Once they’ve got you hooked, then all sorts of problems start, such as you needing to pay certain transfer fees, etc. Eventually, they ask you to fly to their country to pick up the check; they’ve even been known to hold some people for ransom.

As I listed in the rules at the beginning of the chapter, if it sounds too good to be true, it is.

Chain letters are one of the oldest scams out there and have experienced a resurgence thanks to e-mail. Chain letters are essentially pyramid schemes, where the people at the top of the program make more money as more lower-level people are duped into participating.

What happens is you receive an e-mail inviting you to participate in this money-making program. To participate, you send $50 to the person who sent you the e-mail and then send an e-mail instructing 8 to 12 other people to do the same. When they send you $50 each (that’s $600), you keep most of it, but also send a percentage to the person who invited you to participate. All your people do the same as well, and everyone makes a whole bunch of money.

Unfortunately, someone always gets the short end of the stick in this deal, because it is always relying on new participants. A bunch of people always end up losing their money in these deals, which is perhaps why you can get fined and jailed for participating in one.

If you or your family member has been scammed or duped, you should take immediate action to protect yourself and recover whatever funds possible. The sooner you act, the more likely it is that you’ll protect yourself and be able to get your money back.

For legitimate businesses and so-called nonprofits offering debt-related services or moneymaking scams, your best bet is bad publicity. You can call and yell all you want, but they’re used to that. You’ll eventually get over it. But if you show that you’re serious about hurting their ability to make more money, they usually pay you off so they can get on scamming other folks.

In these situations, what I’ll usually have a client do is write up a nasty letter addressed to a local newspaper, outlining the scam or rip-off that occurred. Make sure you are completely truthful, so as not to be legally liable for falsely bad-mouthing a company or person. The letter will usually say something like “I would recommend that you avoid this company and tell everyone you know to do the same.”

Then, fax a copy of it to the company that ripped you off, with instructions where to send your refund. Inform them that, if they do not promptly give you a full refund, you will make sure every newspaper, TV station, and Better Business Bureau within a 100-mile radius gets this letter.

If this does not bring action, do as you promised, as well as contacting your state’s attorney general and the Federal Trade Commission.

Report illegal scams that you are invited to participate in to the FBI (www.FBI.gov), the U.S. Treasury Department (www.USTreas.gov), and the U.S. Postal Inspector (http://postalinspectors.uspis.gov).