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Credit counselor Linda Humburg understands why many of her debt-burdened clients don’t want to open their mail. What bothers her, though, is the sheer volume of untouched bills and collection notices that some bring to their first counseling appointments.

“The shoeboxes (full of bills) don’t make my heart drop as much as the grocery bags and garbage bags,” says Humburg, counselor manager for FamilyMeans Financial Solutions in Stillwater, Minnesota.

Not wanting to confront unpaid bills is a perfectly understandable, if unfortunate, reaction to a bad financial situation. And it’s not just people in extreme debt who might be afraid to look. Many people avoid checking their credit scores or using retirement calculators because they’re afraid of what they might find.

The problem is that delaying action usually makes matters worse.

“There is a price tag for denial,” Humburg says. “And it can be very costly depending on how long it’s allowed to happen.”

The cost of not looking

Retirement savings is a good example. People fear running out of money in retirement, so they don’t calculate what they need to save and procrastinate on saving, says Barbara O’Neill, a certified financial planner and distinguished professor at Rutgers University’s cooperative extension.

That means they lose out on company matches in retirement plans, tax breaks on contributions and the compounded gains they could be earning, she says. The longer it takes people to start saving for retirement, the harder it is for them to catch up — and the more likely it is they will run out of money.

Turning around credit also takes time, so putting it off usually means living with bad credit longer. That, in turn, can mean paying more through higher interest rates, pricier insurance premiums and larger utility deposits. Bad credit also can make it harder to rent apartments and get jobs.

Ignoring bills will, at best, cost people more in late fees. At worst, it can lead to eviction, foreclosure, lawsuits and wage garnishment. People who might have qualified for repayment plans or debt consolidation loans when their financial troubles started end up having to file for bankruptcy.

“The longer you put something off, the fewer the options for resolving the situation,” Humburg says.

When push comes to shove

Many of Humburg’s clients ignore their finances, hoping their financial situations will improve, but “that day never arrives,” she says. Others are crippled by anxiety and depression that’s exacerbated, or sometimes even caused, by unpaid bills. The shame her clients feel over their debts makes it even more difficult to get started, she says.

Breaking out of the tunnel of denial isn’t easy. Some people are propelled into action when they’re turned down for a loan or, in writer Beverly Harzog’s case, their last credit card is canceled.

“That was a rock-bottom moment for me,” says Harzog, a former CPA who in her 20s maxed out seven credit cards by racking up over $20,000 in charges.

Harzog started educating herself about personal finance and credit — and built a budget that allowed her to pay off the debt in two years. She wrote about her experience in a book, “Confessions of a Credit Junkie.”

You don’t have to do it alone

Breaking any task down into smaller pieces can help people get started, O’Neill says.

They can begin by making an appointment to get help, signing up for a class to educate themselves — or opening the latest bills to get a clearer picture of what they face.

People who want to learn more about money can find resources through public libraries and financial education programs run through counties, states and universities, O’Neill says. If you want advice on how to get out of debt, it’s available online.

Those who need a helping hand can turn to low-cost, nonprofit credit counseling agencies, she says, that provide budgeting help and debt management plans. Another option for those able to pay: financial coaches, with referrals available via the Association for Financial Counseling and Planning Education. The cost can vary from a few hundred to several thousand dollars, although many coaches offer a free or low-cost initial assessment.

Bankruptcy attorneys also offer free consultations.

Taking action — any action — makes people feel less powerless.

“Just do it, no matter how difficult the situation is,” O’Neill says.

Liz Weston is a certified financial plannerand columnist at NerdWallet a personal finance website,and author of “Your Credit Score.”
Twitter: @lizweston.

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