There’s a question that comes up again and again when discussing personal finance, and that is, ‘How much debt is too much?’ There is really no set answer. Everyone’s tolerance for debt is different based on income, expenses and long-term financial goals.
But there’s one thing many experts agree upon: if you’ve reached the point of wondering how to manage your debt, it might be time to ask for help.
Fortunately, there is plenty of reliable, unbiased assistance available in the form of credit counseling from a nonprofit agency such as Take Charge America. It’s a great place to start if you just aren’t sure how to manage your debt.
Credit Counseling can be conducted over the phone or in person. A certified credit counselor will work with you one-one-one to:
- Review your income, expenses and debts
- Create a workable budget
- Develop an action plan
As you review your expenses and create a budget, you and your counselor will talk about things like:
- Determining wants vs. needs
- How to save money on groceries and other household essentials
- Whether a debt management plan is the right solution for how to manage your debt
Debt management plans work by:
- Reducing the amount of time it takes to pay off credit card debt
- Lowering the total amount of interest paid
- Allowing more of your monthly payment to go toward the principal
Most clients on debt management plans are able to pay off their enrolled credit card debt in five years or less.
Additional benefits of a debt management plan include:
- Consolidation of multiple monthly creditor payments into a single monthly payment, which may result in a lower monthly total
- The end of collection calls
- Waived late and over-limit fees
- A path to bring past-due accounts current
If a debt management plan is the right solution for how to manage your debt, you’ll also receive ongoing financial education as you work toward becoming debt free.