Pay off debt in 5 years or less with help from non-profit counseling
Nearly 40 percent of U.S. adults carry credit card debt from month-to-month, according to the 2017 Financial Literacy Survey conducted on behalf of the National Foundation for Credit Counseling.
For many Americans, breaking the cycle of relying on credit cards can feel impossible. However, there is a way to get lower interest rates and monthly payments without paying massive up-front fees.
Four years ago, Lenora Edwards was living under a mountain of debt.
"I was $126,000 in debt in credit cards and lines of credit. I even said it out loud, 'I'm too smart for this,'" Edwards says.
Now, she's debt-free with help from the National Foundation for Credit Counseling -- or NFCC. It's a nationwide network of non-profit agencies that will help you get out of debt for a monthly fee you can afford.
"A counselor will sit down and give you a realistic assessment of your financial situation, of your budget and they'll put together a plan that is sustainable," explains Bruce McClary, vice president of communications with the NFCC.
Tina Ponder is a former counselor at GreenPath-- a nonprofit that's part of the NFCC network. Her colleagues guide people out of overwhelming debt, foreclosure, bankruptcy and credit challenges. In 2017, GreenPath helped 52,000 households pay off nearly $200 Million in debt.
"You might have student loans, or you might want to buy a home, or you might want to start a family and finances may just be impeding on your ability to do that," Ponder says.
For people who want to aggressively pay off all of their debt in five years or less, agencies like GreenPath will create a Debt Management Plan for a fee ranging between $10-$50 per month depending on how many debts you are working to pay off.
"Even though there is a minimal fee, you'll generally be paying less over time than you would on your own," says Ponder.
Here's how a debt management plan works:
- Stop using credit cards.
- Make one monthly payment to the agency helping manage your debt.
- Negotiates with creditors to lower your interest rates and monthly payments
- Pays your creditors from your bank account
- Sends you monthly statements showing your progress
- Provides one-on-one support
"It is something that you can do on your own, however, it's generally really difficult to arrange things personally with creditors," Ponder adds.
"It's like a weight off my shoulders," says Edwards. Your debt may feel like a weight you're carrying alone-- but financial wellness organizations say it doesn't have to be that way.
"You shouldn't have to do this alone. That's why we're here," Ponder says.
"You grow confidence in yourself as you're doing it. You start understanding you can manage it," Edwards adds.
To learn more about the National Foundation for Credit Counseling, click here.
To contact a GreenPath financial wellness counselor, click here.
GreenPath’s website also has a free, online Debt Management Calculator to help potential clients assess their financial situation themselves. To use the calculator, click here.