Get help with your credit card debt sooner rather than later. This advice is along the lines of “quit smoking” and “eat more fruits, vegetables and whole grains,” but I had to write it anyway. Bear with me, there just might be some brownies if you eat your broccoli.
I had the pleasure of meeting with Carissa DiRado, a counselor with Consumer Credit Counseling Services of Buffalo, a non-profit agency that helps people get out of credit card debt (they’ve also added student loan debt to their services, a tangent for another day but one I promise to tackle). She explained to me that since the CARD act, credit card companies no longer respond to requests to reduce interest rates (because they are limited to how often and how much rates can be increased) and, therefore, this once bastion of debt relief may no longer be available. Here’s a handy CARD Act fact sheet.
If that were not enough of a roadblock to crawling out of debt, since the recession hit and incomes declined (or ceased), consolidation of various credit cards may not be possible because consumers’ debt-to-income ratio was unfavorable.
CCCS says that their primary service is evaluating credit card (unsecured) debt repayment options I suspect because of that issue, but in a close second is their repayment program.
I’ve worked with a few people with debt issues and they expressed concern about their credit score decreasing if they work with an organization like CCCs, but Ms. DiRado explained that, since the client will have to delay applying for any loans anyways for a period of time (because of their level of debt), the temporary decrease in the credit score becomes less of an issue and making regular repayments increases your score. Here’s a good article on How a debt management plan affects your credit.
But Carissa’s main point was that most people come to her (the agency) way too late waving the white flag, “Usually there is a six-month span of trying their hardest until they can’t keep up.” That’s why it’s important to get a jump on the problem sooner rather than later. “Willingness to understand what got them there and willingness to make changes,” are what’s most needed.
I’m studying Dr. David Kreuger’s “New Money Story” program, and I can’t help but see the connection here. Throughout the workbook the reader is prompted to think deeply about their ideals, needs and desires and what their money story used to be, what it is now, and what they would like it to be. You are the author of your life story, including the role money plays in it. What story do you want to write? The pen (or keyboard) is at your service, start writing! If you’d like to read a great book about how we think about money, pick up a copy of Dr. Kreuger’s The Secret Language of Money.
So, no brownies, but maybe some brownie points with your future self for tackling something today.