“I can’t take it anymore. It’s time to say goodbye. You just aren’t good for me…”
Don’t worry, this isn’t the start of a soap opera. That’s you breaking up with your debt. Do you feel like you’re in a toxic relationship with your credit card debt, personal loan debt, medical debt, car payment, or any other type of debt you suffer from? Are you living paycheck to paycheck? You aren’t alone. We’ve helped millions of people like you break up with their debt, too.
We know it’s tough. But there are plenty of better financial situations in the sea. You may even want to get together with debt-free living. Consolidated Credit can introduce you.
Featured Video
Credit Counseling Helps You Build a Better Relationship with Credit
Learn why your relationship with credit cards may be toxic and how you can use credit counseling to take a break and find your financial independence. Once you’ve found your power, then you can decide if you want to let credit back into your life.
You and your credit cards had a good relationship.
You took that trip together…
They were happy to pick up the tab for nice dinners…
And they’ve always been there for you when you’re in a pinch.
But they’ve also weighed you down with a lot of baggage…
High interest rate debt that consumes your thoughts and keeps you up at night.
Now it seems like credit cards are taking up your entire financial life.
Maybe it’s time for a break.
You need a cooling off period, where you take some time apart and figure out where you are without credit.
You also need some counseling – someone who can come in and help you get to a better place.
Bringing in a credit counselor can help you see that you can stand strong on your own, without relying on credit cards.
Counseling helps you rein your accounts, so you can get rid of all that financial baggage.
Then once you complete counseling, you can decide if you want to let credit back in your life.
Some people decide that they’re better off without credit…
While others simply learn how to have a healthy relationship with it.
But no matter what you decide, credit counseling gives you back your power.
Call Consolidated Credit today to talk to a certified credit counselor at no charge.
We can help you find your financial strength again.
What does debt-free living mean?
Contrary to what you may believe after reading the phrase, debt-free living doesn’t always mean having absolutely no debt. It means getting rid of your bad debt, keeping your good debt, and living life in a financially sustainable manner.
Being debt free will help your finances tremendously.
Jeff Rose, Good Financial Cents
Good debt vs. bad debt
Not all debt is bad. This can be difficult to wrap your head around since the word “debt” has such a negative connotation. However, having some good debt is essential to maintain your debt-free life because it helps keep your credit score high. When your credit score is high, interest rates on any loans you have will be lower, helping you control your debt levels and keep your finances manageable.
When it comes to good debt, mortgages are the best debt you can have. Debt from student loans can also be good if it’s not too high, since investing in your education usually has a significant return on investment. On the other hand, debt from credit cards, almost all auto loans, payday loans, etc. is bad debt. Bad debt usually has high interest or helps you with a purchase that only depreciates in value.
Credit card free vs. debt-free
You don’t have to cut up all your credit cards to have a life free of debt. In fact, closing accounts can be bad for your credit scores. When you live a debt-free life with credit cards, you pay off your credit card balance in full every month. If you do carry a balance, you don’t let it build up. You have a plan for paying it down and get back to zero within two or three billing cycles after a major purchase.
Credit builder loans
If you want to build up your credit without the risk of going into more debt, credit builder loans are a good option. When you take out this type of loan, the bank actually deposits the money into a Certificate of Deposit (CD). You make monthly payments like a regular loan, but you can’t use the money until the CD matures. Then you get your money back, plus the interest earned on the CD. You build credit and build your savings at the same time.
5 Steps to Start Living Debt Free
Ready to break free of your toxic relationship with debt? Read this guide to learn how other people live debt-free.
Step 1: Paying off all your current bad debt
This is an obvious place to start. Paying off debt can be difficult, and it won’t happen overnight. Yet, it’s totally necessary for debt-free living. You can pay off your debt in a variety of ways. Confused about which method to go with? Call a certified credit counselor for a free debt and budget consultation today.
Need help starting your debt-free life? Get a free debt and budget evaluation from a certified credit counselor today.
The first thing you need to do when beginning your debt-free lifestyle is understanding the big picture of your financial situation. Many people avoid calculating the true totals of their debt and income. They are afraid that their situation is bad, and they don’t want to face the consequences.
Let go of that fear and find your true totals. It’s the only way to see your money clearly and prepare for the next step.
Step 3: Creating a budget
When you have a clear view of your debt and income, it’s time to use that information to create a comprehensive budget. Take your time with this step. You want to be extra thorough and make sure you don’t forget anything.
Start by detailing your total monthly income. Then, write down all of your expenses divided into “necessities” and “discretionary spending.” Once you have all of your categories, start setting limits for yourself. Be realistic and consider how much you already spend. If you usually spend $400 per month on groceries, it’s not feasible to set a goal to only spend $40 per month.
Booklet
Budgeting
Money Management
Budgeting is fundamental. Learning how to build a budget provides the foundation you need to build a stable financial life. This booklet teaches you how to make a realistic spending plan that will help you manage credit card debt and achieve your savings goals.
You can only maintain a debt-free life if you can avoid taking on bad debt in the future. The best way to do this is by prioritizing saving money and building your emergency fund. This is the secret of this step: step 2 isn’t done yet. You made your budget, but until you add monthly contributions for emergencies and savings, you aren’t finished.
Step 5: Living within your means (and using credit responsibly)
Congratulations! You made a budget and put saving closer to the top of your list. Now the only thing left to do is stick to it. When you follow your money guidelines and avoid taking on any new bad debt, this is living within your means. Continuing to educate yourself on personal finance will also help you maintain your debt-free lifestyle.
Credit cards can be an invaluable financial tool when used correctly, so follow these 8 credit tips to foster good credit habits while avoiding the bad…Watch Video >>
Credit cards are a great financial tool when used correctly. But you have to be a Smart Spender when it comes to using credit the right way.
Smart Spenders aren’t going out to get credit just because they can. And they don’t treat credit like money that they don’t have to pay back. They understand that credit cards can be used for convenience, safety and tracking, but even credit cards used for the right reasons have to be used responsibly.
Smart Spenders aren’t constantly going out and signing up for new credit cards. Instead they only get new credit when they need it and shop around for the best cards for their needs. Instead of being lured in by advertising, they research credit cards carefully to ensure they’re not blindsided once the card is in use or that the rewards aren’t worth the interest and fees.
Smart Spenders aren’t using luck or crossing their fingers hoping that they get approved because they know exactly how creditors judge creditworthiness. They understand the three Cs – character, capital and capacity. They know they have to show they’re a responsible borrower who can and will repay what they borrow, with assets to back them up.
Once Smart Spenders find the right card for their needs, they take time to read through the contract carefully so they know what they’re really getting into. They know their credit limits, can strategically pay around the grace period, and know how to avoid penalties – and exactly what those penalties will be if the card is misused.
Even though credit card statements always come with a minimum payment requirement, Smart Spenders always pay more than the minimum – it’s a trap. They usually pay off everything in full on credit cards used that month. This way they always start the month with zero balances on their cards. When they can’t pay off a balance in full, they make a plan to pay it off as fast as possible, and know how to read statements to find balance payoff information.
A credit card grace period is the amount of time you have to pay off a balance before interest charges are applied. A Smart Spender knows when the grace period ends in relation to each billing cycle so they can pay off the debt accrued that month before the interest charges are applied to minimize the cost of using credit.
Smart Spenders understand that just because a credit card company gives you a high credit limit, it doesn’t mean you should run up that debt. Smart Spenders check two metrics often: how much they can afford to borrow and what they can comfortably pay to eliminate debt each month. They check how much they can borrow by setting a limit at 15% of their net annual income. And they also check how much they can afford to pay back each month by calculating 10% of their net monthly income. This helps ensure Smart Spenders have enough money for bills, expenses like groceries, and even savings.
One of the biggest downsides to using credit is it makes it really easy to give into impulse buys when you see something you want in a store. Smart Spenders resist the temptation and only buy things when they need them after taking time to shop around for the best price. They may even think about it a few days before deciding to buy something to make sure they really have to have it. They also avoid other bad habits, like using credit to cover budget gaps, leaving balances to accrue interest month after month and using one credit card to pay another.
Now you know these eight credit habits to make you a Smart Spender, too!
3 Best Parts of Living Debt Free
Keeping more of your income
Living with debt means putting much of your income toward monthly debt payments. Living debt-free means keeping much more of the money you earn for yourself! Having more cash on hand makes day-to-day living much easier. It’s also easier to save money.
Enjoying improved mental health
Debt has a measurable negative effect on your mental health. Getting rid of it reduces stress and gives you more time to do the things you love.
Booklet
Coping with Financial Stress
Money Management
Financial stress can affect your life at home, your ability to be productive at work, and your relationships. This booklet offers guidance on steps you can take to minimize financial stress and deal with the finances that that are keeping you up at night in a practical way. Learn how to set realistic goals and have the right money mindset.
Along with keeping more of your income, debt-free living also means you can invest more of your income into your retirement fund. A bigger retirement fund means you are more prepared for the future – and the relaxing retirement of your debt-free dreams.
