Learn who needs credit counseling and the importance of money management
What is credit counseling and who needs it?
Most people hearing the words ‘credit counseling’ tend to think of people in trouble with their debt. In reality, credit counseling involves making an accurate assessment of your financial picture so you can develop a realistic spending plan (otherwise known as a budget). Credit counseling provides you with the tools to learn to set short and long term financial goals that will meet your ideal comfort level for financial success. A good education in credit counseling is an asset that everyone can benefit from.
When is credit counseling a good thing to check out?
While the majority of people do wait for a financial crisis to happen before they turn to a credit counseling service, it’s a better bet to begin credit counseling at a young age. The sooner a person learns about the strategic money decisions that need to be made in life, the better the financial future for that person will be.
With our national consumer debt standing at approximately 9.3 trillion, that makes each US household individually responsible for about $18,700 of that amount. While statistics say that 55 to 60 million US consumers average about $7000 apiece in credit card spending alone, it is interesting to note that not paying that $7000 off in a year, can add up to $1000 extra to the balance in interest and fees.
Early credit counseling helps people avoid poor financial decisions. In contacting a local credit counseling service, the person looking to educate themselves in money management is taking a positive step forward for a financially sound future.
On the same hand, someone who is in financial distress can take the same credit counseling advice to get out of debt and regain financial stability.
How can young people contact someone about credit counseling?
One of the easiest places to start is at your local bank branch.
Many banks are offering “real life” branches at elementary and middle schools now. Students become actual bank customers, opening up savings accounts and applying for loans. Before signing for their loan, students attend a personal finance class to learn about repayment and interest requirements. They also learn about the consequences of over-extending their budgets, and potential non-repayment penalties. Basic money management techniques are given to the members of the school bank.
Many consumer credit counseling organizations offer activities for young people of all ages, whether it’s children’s seminars about money management, or on-line interactive games that teach about consumer credit.
Where do I go to get credit counseling?
Contacting a good credit counseling service is as easy as going to your phone book. Any organization connected to the national Consumers Credit Counseling group, will provide you with a myriad of no cost services. Be money-mindful if you find a service that has charges for seminars, workshops or booklets, because most of that information is free of charge from the leading consumer counseling groups.
Once you’ve found an organization that shows you it’s long term track record of helping people, you will find there are several stages of credit counseling education.
What happens once I make an appointment at the credit counselors?
While some of these services are now available on line, you will find that some services will provide an in-person interview with a professionally certified credit counselor, who will sit with you and go over your personal financial situation. They will ask you to bring in a list of ALL of your debts, listing: the creditor name and address, the balance, the monthly payment, if the payment is past due, the account number, and any other pertinent information. After an initial assessment of where you are financially, the counselor will set up a monthly budget for you to follow.
If you are in financial difficulty, you will have the ability to join a debt management plan in which you will pay your monthly budgeted payment to the consumer credit counseling service, which in turn sends your payment to the creditors. You should note that there is a minimal surcharge for the handling costs of the debt management service. It is usually under $20, and pays for the check writing fees and mailing costs. This fee is added to the monthly budget payment for the debts to the counseling service, and is therefore easy to pay.
This debt management part of the counseling services is supported by creditors nation-wide. The creditors would rather work with the credit counseling service to help you restore your financial health, than to see you file bankruptcy, which causes them major losses each year. Many times, the creditor will stop charging interest, and will waive late fees to those under a consumer credit counseling debt management plan. This helps more of the payment go straight into the principle balance, for a quicker debt reduction.
What else can I do to get more information about credit counseling?
After completing the basic beginnings of credit counseling by contacting a service and making a budget, there is then a world of information just waiting for the interested consumer.
The Federal government has many listings on the internet for consumer credit information availability.
You should take advantage of regularly scheduled credit counseling events and seminars sponsored by the local consumer credit counseling organizations. Local banks, credit unions and other financial institutions also have public awareness events that you can attend. Some topics of discussion include: Successful budgeting, Credit Reports and Credit Scores, Balancing your Checkbook, Getting Ready for Back to School expenses, Building up Savings, Consumer Credit Laws, Income Tax Time, and Buying a Home. All of these classes are given for the public as a free service, and there are usually plenty of handouts given which provide a ton of valuable information!
What can I do with all this information I’m gathering from the credit counseling organizations?
You speak to someone every day that needs help in managing their money, in one area or another. Talk to people, and let them know that this information and help is available to them, too. Speak to local school officials to let them know these programs are available to help educate our school children about the big affect consumer credit has on their lives and future financial picture. Maybe you could become a volunteer credit counselor at the local credit counseling center, to help change lives through smart money management.
But, most importantly, take the information and use the tools you’re given to provide yourself and your loved ones with the financial freedom that you’re looking for. An education in credit counseling is an outstanding weapon to have in a daily war against financial bondage; it’s a weapon that everyone should be licensed for.