Gaurav Bhola, MSM, Managing Editor
American consumers are always struggling to keep up with their monthly bills, especially credit card bills. In addition to skyrocketing gas prices and rising household expenses, credit cards are being used more often to pay for nominal items.
Credit services that offer credit counseling have seen a sharp increase in the number of families seeking help. These families have let their credit card debt get out of control, thus seek debt management programs to pay down their balances.
More and more people are using cards to get by on a daily basis for various reasons, but the main reason seems to be that they don’t have enough cash flow to sustain themselves every day. Unfortunately, this is an unending vicious cycle of debt because these people see plastic cards as the only answer to every day survival.
Credit counseling services are receiving increasing calls for debt consolidation and/or debt elimination. According to the debt counselors, credit debt help is still the most sought after service, even amid rising mortgage defaults and foreclosures.
According to the Federal Reserve (Fed) recently, outstanding credit card debt grew at an annual rate of 4.4 percent to $920.1 billion in September 2007 up from $917 billion in August. Before, plastic was used by consumers mainly for emergencies, but now it used to pay for even a stick of gum. It is mind boggling, that someone will buy $1 gum and pay up to 28% for in interest.
Alas, the consumer debt problem is of staggering proportions, at the national and individual level. At the individual level, credit repair of consumers’ credit scores and credit reports is of alarming concern as well.
It is a multi-pronged strategy that has to be implemented under the debt management program (DMP) to find resolution to the people’s concerns. The counselors negotiate with card companies on your behalf to reduce interest on debt, pay pennies on the dollar, and cut penalties.
Even though, debt counseling services can get the companies to forgo or lessen penalty fees and reduce interest rates; you also have to engender fiscal responsibility.
Getting out debt is the answer but financial discipline is the key to long-term financial success. Monthly budgeting plans and knowing your cash flow can help make implementing a financial plan easier.
The growing debt burden in America crosses every demographic: from single to married, every race, every ethnicity, and every age group. It is not uncommon to see retirees, whose only source of income is social security with five figures worth of unsecured debt.
Overall, if you find yourself in an unmanageable debt situation, haven’t been able to do it yourself, then professional help may be the answer. But the most important thing in the whole debt elimination process is serious commitment to change and a new start. Without a forthright commitment, debt management will only be a short-term resolution, not a long-term solution.
