Even if your income is small, advisors at a credit counseling agency can help you get on track to eventually climb out of debt.
You may not yet be in a position to qualify for debt management, but counselors can help you set financial goals and learn to manage your money going forward.
By assessing your current situation and comparing income to outgo, they will help you see which expenses might be trimmed or eliminated. They may also help you negotiate with your current creditors to lower interest rates and reduce monthly payments, so you will be able to make monthly payments.
Learning to live within a realistic budget is one of the first steps toward financial solvency, but it is unfortunately not one of the classes taught in school, nor is it always taught at home. Thus many young people go out into the world unprepared to resist the temptation of overspending, especially with credit cards.
Credit card debt can be devastating to these individuals, because the purchases and the high interest rates can quickly result in a minimum monthly payment that they can’t cover.
I witnessed one young man being turned down for a rental based on the long list of charge-offs and collections on his credit report. His response to having such poor credit was “Hey, I’m young. I gotta have fun!”
Maybe so, but all that fun means that any time he does get credit, he’ll pay the highest possible rate, and unless he changes his ways, he’ll never qualify to own a home.
If you find yourself in this situation, don’t fall prey to the advertisements promising to “fix” your credit report for a hefty fee. The only items on your credit report that can be fixed are the mistakes – any true reports will remain in place until 7 years have passed. All these agencies will do for you is lighten your bank account even further!
Instead, contact an agency that is a member of the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. In many cases, the help you need will be give at no charge.
After counseling, you should have a workable budget and an action plan to not only pay down your debt, but begin a systematic savings plan. Once you’ve eliminated your dependence on credit cards, and thus the high interest payments, you’ll find that even a small income goes a lot farther.
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