Debt Counseling Assistance: Legal vs. Phony
Posted on May 30, 2008
Filed Under Personal Finances |
It’s amazing to think that nearly 80% of debt by consumers in the US is on credit or some other sort of “pay later” method. With that in mind, the average single person’s debt from credit card usage is roughly an amazing $8,000! And add into that an average interest rate percentage in the mid-to-upper teens.
With all of this debt, it’s no mystery why there are many publicly available programs to offer debt-riddled consumers various means of debt resolution. Of all these programs, debt counseling is one of the more preferred.
Debt counseling teaches a customer, very simply, about their intake of money and their bills. With a counselor, you discuss how much money you make and how much you’re spending so you can better avoid adding more debt to an already beefy load.
Being able to understand how debt works and how to avoid it will significantly impact the interest rates you’re getting as well as the loan types for which you qualify. Going through the debt counseling process, especially at a local program is important before you continue to charge for additional expenses.
Debt counseling through the Consumer Credit Counseling Service (CCCS) or other trusted agency should be a preventive measure for everyone who is interested in managing their debts, but it is more typically used as a last resort when debt has gotten out of hand.
What is it that a debt counselor does, though? Here is a short list of some of their focus.
1. Credit Cards. A debt counselor can instruct you on how credit cards and their companies work. Credit cards make it very easy for a person to accumulate debt, much more than they can afford. Unfortunately most consumers aren’t knowledgeable about the actual inner workings of credit cards.
Over 70% of people with credit cards aren’t knowledgeable of their balances or their minimum payments each month because most write a check to cover that minimum payment and nothing more. This only serves to make debt grow higher due to lofty interest rates.
2. Financial Management. You will be taught how to manage your cash flow effectively by reeling in your expenses. Through this, you will become aware of your monthly credit card billing cycles. Rather than allowing your debt to increase, the focus will be on debt reduction.
3. Saying No To Plastic. The easy availability of credit cards make it so comfortable and convenient to increase your debt. You will learn when to use cash and when to use credit. Credit cards ought to be “hidden” for casual purchases, and saved for truly critical needs.
Debt counseling is effective in aiding you to manage your debts effectively. Use these services proactively before sink under the weight of debt.
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