There was a time in my life that I bit off more than I could chew regarding my credit limit. I was young and naive on the specifics of credit cards. I signed up for 3 different accounts before the age of 20. Of course, the credit card companies were itching for people like me. They fed me stories on how I needed to build up my credit history and establish a good foundation for the future.
What they neglected to say was their extremely high interest rates and the actual importance to pay off your balances in a timely manner. Otherwise, you’d be accruing more interest and adding to your debt. Years passed with me just paying the minimum payments with all my credit cards at near max. If I continued to pay my credit cards at the minimum amount, it would have taken me 25 years to pay off the remaining balance.
Despite conversations with my credit card companies, I had to take additional action. It got to a point where I was drowning in my credit card debt and I didn’t see an end in sight. I wanted to find a way to get myself back on track and eliminate my debt as well as learn some safe credit card habits. So I researched ways and programs that could help me.
Are you deep in debt? Here are debt and credit counseling tips for military families.
Military OneSource provides free financial counseling. All you need to do is give them a call and they can walk you through options that could help you negotiate a reduced rate with your creditors and offer basic education on money matters, including debt management and things as common as setting up a budget. They can give you the foundation to tackle your goals and become debt free.
Another great option is enrolling with a debt management organization, which is the route I chose to take. You are assigned a credit counselor that is familiar with your situation. I wanted the ease of a single professional guiding me through the process and also a company that took care of negotiating with my creditors on my behalf. I made 1 payment to my counselor and they allocated the appropriate funds to each creditor.
Everything was simplified to me by my debt counselor, down to the penny. Because they knew my financial history, I was able to get a thorough explanation as well as a very streamline approach to be successful. I really liked having everything mapped out for me and finally seeing the light at the end of the tunnel.
I sat down with my counselor to evaluate what was possible with my income minus all my living expenses. Even with the small fee the debt management charged, they were able to negotiate a payment plan with my creditors that would have my debt paid off in 5 years (instead of the calculated 25). That to me was a win-win situation.
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Be very careful with shopping around for a debt management counselor, especially if you’re going to do it outside of Military OneSource or any other military, veteran or government entities. Basic signs for a credible organization are that they are a member of the National Foundation of Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies as well as backed by the Council of Accreditation. Another telltale sign is that they are a nonprofit organization.
Debt management companies as well as accredited counselors are there to help and inform consumers. At first, it was very intimidating for me, especially because I had no financial background or any previous education. After discussing my credit card debt in depth, I felt confident and looked forward to reducing my debt and saving for the future.
You don’t have to limit yourself to the payment amount that was calculated by your debt counselor. If you can pay a little more each month, wiggle it into your payment schedule and it’s possible to pay the credit card debt faster than your plan. When I received my tax deductions, that’s when I added more to my payments and finished off my debt counseling plan earlier than 5 years.
In addition to knocking down the time it would take to payoff the debt, Debt management company taught me safe credit habits. The last thing I would want is to be in a similar situation again.