This article provided by the National Foundation for Credit Counseling (NFCC).
Each summer Americans take pride in celebrating the Fourth of July, the day that commemorates the 1776 adoption of the Declaration of Independence, which proclaimed our nation’s freedom from what is now known as the United Kingdom.
This July 4th the National Foundation for Credit Counseling® (NFCC) challenges Americans to declare their own personal financial independence by making a commitment to become free from the bondage of debt.
“The stress of unmanageable debt has destroyed marriages, shattered families and contributed to lost jobs,” said Gail Cunningham, spokesperson for the NFCC. “No one ever scripts financial ruin as a part of their life plan, but when financial distress occurs, it is a very real part of a person’s daily activities, as debt is a burden people carry with them 24 hours per day.”
Aside from the personal problems associated with debt, consider the following financial reasons to take action and begin to resolve your debt issue now:
- A blemished pay history reflecting late or missed payments tarnishes a person’s credit report which could result in a lower credit score;
- A low credit score often equals a higher interest rate when borrowing money, making the cost of credit more expensive;
- A tarnished credit record could diminish access to additional credit needed for emergencies or unplanned expenses;
- With an unrealistic amount of money earmarked for debt repayment, saving and investing is often neglected, and
- Planning for future needs, such as college or retirement, is often delayed due to a lack of money.
People may mistakenly think they are responsibly managing debt by making the minimum payments due every month. They don’t bother to calculate how long it will take them to become debt free, or how much they will have paid in interest. Consider the following example:
With a $10,000 credit card debt at 18 percent interest, even if a person never adds any purchases or fees to the account, and makes a monthly on-time payment of two percent of the balance, it will take them 48 years to become debt free. Further, that original debt of $10,000 will cost them $36,825, with $26,825 going toward interest.
That’s an extreme example, but it does highlight how debt can hang around for years, even if you do everything “right.”
Fortunately, there is a way out from under the oppressive weight of debt. The first step is creating a plan that works for you and your unique situation. If you need help creating that plan, we can help. Debt counseling is a free service, available to anyone in need. Our trained and certified counselors can help you understand your options and make the best choice for you and your priorities.
Are you ready to declare your financial independence? There’s no better time than right now.