There is one question that we get asked time and time again. That question is “Can credit counseling really help me?” We know that everyone’s situation is unique and different from everyone else’s. Some people fear that we may not be able to help them because they have too much debt, not enough debt, or they have medical debt and not much credit card debt. That is not always the case, and the only way to find out for sure is to speak with a certified credit counselor or try a free online counseling session.
Below is a list of just a few individuals who could really benefit from free credit counseling and who should contact us to find out their current financial situation, and how we can help them. Credit Counseling is beneficial to everyone! You don’t have to be in debt to go through a free credit counseling session and set up a realistic budget to get an overview of your finances. If you happen to be in debt, credit counseling is extremely valuable, and it’s the first step on the path toward financial freedom.
Here are some examples of who we can help:
Medical or Disability Debt
Medical debt can be more emotionally taxing than other types of debt because it almost never accumulates by choice. Medical debt is most often a result of an unexpected illness or an accident. It can add up quickly, leaving people in precarious situations and not sure what path to take next. The average daily hospital cost in America is around $3,949. Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year.
Our health care system can leave much to be desired. With things like gaps in coverage, failed policies, and increasingly costly alternatives, it’s easy to see why someone might fall into debt because of medical expenses. The truth is just about every doctor’s office now takes credit cards as a form of payment. The medical industry wants to get paid at the time service is rendered. To be fair, they are not in the lending business.
We see many individuals that need our help because of medical debt or because of problems with a disability. The good news is that we can help with most types of medical debt, and going through a credit counseling session can help you understand everything and make a game plan for tackling that debt.
Separated or Divorced Individuals
From an emotional and financial standpoint, a divorce can be one of the toughest periods of a person’s life. When it comes to divorce and debt, there are two forms of debt that the courts primarily tend to look at; those are living expenses and community property. Where you live will usually determine what debts you will have to share. Divorce is NOT a surefire way to escape a spouse’s debt problems.
Sometimes debt can even lead to divorce and then because of the divorce you might find yourself in even more debt after things get split up and distributed. This can cause extreme financial and emotional distress, and it may seem like there’s no light at the end of the tunnel. Credit counseling BEFORE and even AFTER a divorce can be very beneficial and helpful.
College Students and Graduates
It seems like the moment you turn 21 you are bombarded with credit card offers from a number of different lenders. Why do these credit card lenders seem to hound young college students and even college graduates? It could be a number of reasons, but this is a scary statistic about college students and credit card debt: The average credit card balance among college seniors is $737.00. This is in addition to the student loans they are going to have when they graduate.
About 84% of all undergraduate college students had at least one credit card. If you have credit card debt when you graduate and you have to start paying back your student loan debt, things can get pretty difficult rather quickly. Credit counseling could help you get a grasp on things and get a game plan going. While credit counseling can’t help eliminate student loan debt, it can help with any other unsecured credit card debt that you may have. It will teach you proper money management skills and tips to help you along the way.
Job Loss or Reduced Income
Many debt problems have their beginnings in job losses or reduced income. Sometimes individuals will continue to spend the same amount every month, even though, their income has been decreased or has become nonexistent altogether. It’s important that your expenses and lifestyle match your income; this is where the saying “Live within your means” comes from.
If job loss is the reason, make a plan right away. The plan must include striving for financial stability and finding another job as soon as possible. Network and make contact with people that can be helpful in the job process. Use free job finding services like LinkedIn or other social media sites. If reduced income is the reason and finding another job or having a second job is not feasible, then you must find ways to lower your expenses and live within your means.
Death in the family
A death in the family is devastating, and it could also cause major financial problems, especially if the deceased person was the main source of income. You also have the ridiculously high cost of funeral arrangements to deal with, time off work, and other necessary expenses.
Many people wonder if their deceased family member’s debt will now become their debt. The laws are defined at a state level, so there’s really no “umbrella” answer for everyone. In most cases, the only instance in which another family member would be responsible for the deceased person’s debt is if they cosigned on a loan with them. Even if you don’t take over their debt problems, you will still be faced with many financial difficulties, and credit counseling would be very beneficial to you.
Excessive Spending or Poor Money Management
Excessive spending and debt usually go hand in hand. Sometimes a few fun shopping sprees can turn into a debt-causing addiction. If you have poor money management, then you may not even realize how much you’re spending until it’s too late. The first step in changing a habitual spending behavior is admitting or recognizing that it exists. If your financial situation has suffered because of excessive spending or poor money management, it’s a good idea to get help from a reputable credit counseling agency.
Gambling or Substance Abuse
According to a recent study, approximately 85% of adult Americans have gambled at least once in their lives. Most individuals are casual gamblers and can indulge from time to time without suffering any negative financial consequences. However, when gambling becomes an addiction, and your financial situation gets scary, it’s time to call Gamblers Anonymous and a non-profit credit counseling agency for help.
Substance abuse normally results in more than health problems and relationship troubles. It is almost certain that financial disaster will follow shortly thereafter. As an individual’s drug habit becomes more expensive he/she will typically exploit all financing opportunities. There are also some heavy fines that are usually associated with substance abuse. The typical cost of a DUI is around $10,000 or more depending on the state laws.
New Baby
Having a baby is pretty expensive! The labor and delivery charges alone could cost you around $10,000 – $18,000, depending on the place of birth and other factors such as natural birth versus cesarean section. Babies also need a ton of new things such as diapers, nursery furniture, clothes, formula (if you’re not breastfeeding), a stroller, and at least one car seat, to name a few things. Plus, your utility bills will definitely see an increase. Parents spend on average $10,949 on the baby’s first year, according to a recent survey from the BabyCenter.com website.
Marriage
With the average wedding in the United States costing roughly $30,000 it’s no wonder why some people fall into debt when saying “I do”! Those first few years of being married are when you’ll most likely be racking up even more debt. Between the wedding costs, honeymoon, and possibly purchasing a new home or saying hello to a new bundle of joy, this is prime time in someone’s life when debt just seems unstoppable.
Even if you didn’t spend the national average of $30,000 on your wedding, your combined life and the changes that will take place because of that could also lead you into debt. In a recent survey, 40% of couples said they didn’t discuss money with their partner before getting married. That is just shocking and could lead to problems further down the road. Your spouse could have some serious debt problems that you weren’t aware of. It’s really important to discuss money issues and credit/debt problems with that special someone BEFORE you walk down the aisle.
Retirement
The recent recession has seemed to worsen the debt problem among retirees in the United States. According to the Consumer Financial Protection Bureau (CFPB), the percentage of homeowners age 65 and older carrying mortgage debt increased from 22 percent in 2001 to over 30 percent in 2011, and it’s still on the rise. It seems like people nowadays are not planning for retirement as well as they had in the past.
The majority of retired people who are carrying credit card debt has also increased in the past few years. Retired individuals who are living on a fixed income can risk getting themselves into financial trouble if they carry credit card debt past the retirement age.
Buying A Home
It’s really not news that student loan debt is affecting the housing market. Many college graduates who would love to purchase their first house, but can’t do that because they carry too much student loan debt. If they DO purchase a home, they may be faced with challenging financial decisions as they try to juggle credit card debt, student loan debt, and mortgage debt.
Have you ever heard the saying “House Poor” before? It means that a person has spent a large proportion of their income on homeownership, including mortgage payments, property taxes, maintenance costs, and utilities. House poor individuals are always strapped for cash and tend to have trouble meeting other financial obligations, such as the credit card bills.
Conclusion:
It’s really not news that student loan debt is affecting the housing market. Many college graduates who would love to purchase their first house, but can’t do that because they carry too much student loan debt. If they DO purchase a home, they may be faced with challenging financial decisions as they try to juggle credit card debt, student loan debt, and mortgage debt.
We’ve listed several reasons why someone might need credit counseling, and also who could benefit from a credit counseling session. There are many other reasons that could be listed, and it’s important to understand that while someone in debt should definitely seek out credit counseling, it’s really a great idea for ANYONE. Credit counseling can help you free up money each month by following your personalized budget that you’ll receive, and by following your customized Action Plan or “game plan” each month.