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When Getting By Gets Out of Control

Using credit cards to get by is really a sign of falling behind.

The way you feel about finance can be a funny thing. A positive money mindset can push you to achieve results where a negative attitude would lead to failure. At the same time, feelings of complacency can be dangerous. You may be satisfied just getting by when really, you’re one financial emergency away from hardship.

This is where Renee was when she came to Consolidated Credit. She used her credit cards for everyday expenses here and there. In her mind, she was getting by. But it soon became clear that “getting by” was actually making her fall behind. Renee needed a new strategy AND a new attitude about her finances.

Renee’s challenges with debt started during school…

Renee got her first credit card during college when she was 19. She didn’t do it to be frivolous.

“It wasn’t like I bought anything extravagant. Most of the debt I racked up covered living expenses for the four years I was in college. My parents paid for my tuition, but I paid for my books, parking and groceries. I had a job, but most of my work money went towards rent.”

Renee knew she would have to address the debt eventually, but hoped that after school things would get easier. She focused on her education. However, by the time she graduated four years later she had eight credit cards and close to $19,000 in debt.

Unfortunately, she was already in a vicious cycle of debt…

I was treading water. I was shelling out over $1,000 a month and getting nowhere.

Once Renee found a job with a steady salary, she buckled down to pay off everything she owed. Making progress proved to be tougher than she thought.

“I was making double the minimum payment requirements, but my principal balances were not going down at all. The interest rates were between 15 and 20 percent. Even worse, I would spend so much money trying to pay off my credit cards that I didn’t have enough cash left for living expenses. So, groceries and gas would go right back on the credit cards I was trying to pay down every month.”

This is a common problem with revolving debts like credit cards. The required monthly payment increases as your balances go up. However, roughly 2/3 of every payment you make covers accrued monthly interest charges. As a result, you can pay month after month without seeming to make any progress. It’s frustrating to no end. It can also be a tough situation to get out of debt on your own.

A radio ad put Renee on a path to find relief…

“I knew I needed help, but I wasn’t quite sure what to do since I’d never done anything like this before. Then I heard a radio ad for Consolidated Credit. It led me to do a Google search and after a little review it seemed legit.”

Even without knowing exactly how to move forward, Renee did the right thing. There are plenty of companies that advertise solutions for debt relief; but in some cases, they can be too good to be true. It’s always advisable when seeking a financial service provider to research any company thoroughly online. You want to look for:

  1. A Better Business Bureau rating
  2. Independent third-party reviews
  3. Scam alerts

With the research done, Renee made the call

I felt like there was hope. I felt like there was light at the end of the tunnel.

“I actually talked to a few companies before I made my final decision. Consolidated Credit stood out because it gave me more control. Instead of someone else being in control of my finances, I still had a little bit of control. That wasn’t the case with the other companies. They wanted you to commit for a certain amount of time.”

This is one of the advantages of a debt management program – it’s completely voluntary. You’re not obliged to sign up even if you get a free debt evaluation from one of our certified credit counselors. Once you enroll, you can leave the program at any time. Your creditors still credit all payments made through the program to the point you leave. If you leave before you pay off any balances in full, you simply go back to paying your creditor directly. This generally means you return to your previous payment schedule and interest rate.

Renee didn’t mind giving up her credit cards…

Although enrollment in a debt management program is voluntary, it’s important to note the freeze it creates on your accounts. During enrollment in the program, your creditors freeze all credit card accounts included. This means you can’t use your credit cards again until you complete the program. You also can’t apply for new credit cards. You can apply for loans, such as a mortgage or auto loan if you need financing as Renee did.

For Renee, the freeze wasn’t an issue:

“I was so mad at the credit card companies anyway that I didn’t care that much. I looked at my situation and said, ‘Well, I had been paying $1,200 a month for my credit cards before joining the program. Now I’m down to paying $500, so I have $700 to cover any need I have in a month.’”

The best thing about being on the debt management program is that it didn’t hurt my credit. I was still able to get a car loan and a mortgage.

She also learned how to get stable instead of just getting by…

“The experience of living without credit cards for four years really changed my mindset. It changed how I budget and how I spend my money now. The extra $400 to $500 I paid to Consolidated Credit now goes to bigger and better things, like saving for a new house.”

Renee completed the program in just four years. Consolidated Credit lowered her interest rates, in some cases to as low as one percent.

“I’m really happy that you do what you do – help lower interest rates like that. The set monthly payment was easy on my budget and freed up cash for me to live on. It was a great feeling that I was no longer using credit to get by. It made a world of difference and now my debt is completely paid off!”

 Renee encourages others who are just getting by…

“If you feel like you are barely keeping your head above water, pay your credit cards off! I could’ve told myself, ‘OK, I’m locking all of my credit cards in the freezer,’ but that probably wouldn’t have helped. I would still be making credit card payments because the credit card companies don’t mind charging a girl who’s just trying to go to college. It took a shot to my pride, but I need the help. And there’s nothing wrong with asking for help.”

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