Why A Credit & Debt Counseling Company May Be Your Only Way Out Of Debt

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The modern world is run by credit. Since the advent of the credit card, more and more no longer bring cash along with them to purchase stuff. While the credit card was designed for people not to bring cash, its use was extended due to the fact that there is a waiting period where do not have to pay. Credit card companies also discovered that by allowing a minimum payment, they can actually charge as much as five percent monthly in interest alone. This is the primary reason for personal bankruptcies that has placed modern society. A credit and Debt counseling company is your only way out of the predicament.

They educate you

The initial help from a credit and Debt counseling company starts with education. They will educate you about what debt is really all about, how to use if responsible and the dangers of too much debt. When people are informed that the interest is five percent per month, they just shrug it off, thinking it is small. The number five is a small number in a scale of one to a hundred which our logical mind always refers to. However, if you translate it into interest rate it will come out as sixty percent per year. If you have a credit card debt of 5,000 and only pay the minimum about which is the interest alone, you will be paying 3,000 in interest payments for the whole year. This is the reason for personal bankruptcies.

CreditCardDebtThey help you make a personal financial assessment

Another help from a credit and Debt counseling company comes in the form of personal financial assessment. In accounting parlance, this is referred to as your statement of financial condition. It means that as of today, how much are you worth? How much are your assets and how much are your liabilities? If you have more debt than assets then you are personally bankrupt and this is happening to many individuals, without them ever knowing about it. A personal financial assessment informs you that you are already in a dangerous financial situation and you need to do something about it.

They help you with budgeting

One of the hardest things to do is to make a budget. With credit card usage, debt has increased and budgeting has become a lost art. A credit and Debt counseling company can help you with formulating a monthly budget. This can be very helpful if you are buried practically in debt and can no longer find your way out. A good budget will help you out of your financial mess. This will require a huge sacrifice on your part. Your shopping may have to be eliminated and everything must be according to a specific financial plan. Every spending will have to be listed to the last detail.

They help you ultimately reduce and eliminate your debt

This is ultimately the goal of credit and Debt counseling company. They will help you reduce your debt and later on help you eliminate your debt. Do you know that the best situation in life is to be debt free? It is not having a fancy car that you are hardly able to pay, but it is having financial freedom by being debt free. If you do not have debts, there are so many things that you can actually buy. It is not the other way around. The concept of many is actually wrong, that you can have more by getting it on credit. The more debt, the more money you lose to the interest. This is what many have not learned.