Credit counseling provides more than financial coaching for people who are drowning in credit card debt. Consumers who struggle with credit card debt often seek credit counseling for assistance with their debt situation. According to a recent article by nerdwallet.com, household debt for American consumers increased this year, but mainly due to mortgage and student loan debt. The good news is credit card debt went down by 3% while mortgage debt went up almost 2% and student loan debt went up by 1.69%. The Nerd Wallet study also shows that although the average balance on credit card debt is much less than mortgages and student loans, the interest rate on credit card debt is significantly higher. Paying off high-interest credit card debt through a debt management plan is the key to financial freedom. For people who enrolled in debt management, credit card debt quickly becomes a burden of the past. While experts say consumers are in more debt than during the Great Recession, there are positive steps that you can take to reduce your consumer debt.
Be honest about the problem
Experts say the first step is to get real and deal with your financial crisis. If you have been putting your credit card statements aside, it’s about time to face your debt head on. Avoiding your debt won’t make it disappear. Find out how much credit card debt you have and create a repayment plan. Analyze your spending habits. Consider your future goals and plans. Do you want to retire in five years? Do you hope to get out of debt so you can buy a home in two years? When you set goals, you will likely find the motivation to make positive changes.
Learning to set a budget
By creating a budget, you can figure out where to cut back on spending and how much you can save. A budget keeps you on track by helping you spend less than you make. Some people make the mistake of having an extremely strict budget that is impossible to maintain. Make room in your budget for retirement and emergency savings, as well as occasional entertainment and discretionary expenses. A budget analysis will help to put your financial situation into perspective.
Improving your credit score
Remember to pay your bills on time and avoid opening new lines of credit. If you have a low credit score, a credit counselor can conduct a credit review and provide you with tips on how to read your credit report and dispute inaccuracies. Instead of moving debt around with balance transfers, simply pay off the debt. If you need help eliminating large debt, consider debt consolidation through a credit counseling agency.
At Christian Credit Counselors, we help consumers get out of credit card debt by consolidating their debt. We also provide you with a financial checkup and help you improve your credit score over time through financial education. For more information on credit counseling, please contact us at 800-557-1985 or visit our website at www.christiancreditcounselors.org.