When you are dealing with massive credit card debt in your 20s or early 30s, it is difficult to get a mortgage loan or a car loan. In some cases, lenders demand you pay a higher interest rate because of poor credit and too much consumer debt. By engaging in credit counseling, you take control of your financial future before it’s too late. According to a recent article by wgem.com, half of Millennials in their 20s decided to get a credit card after hearing a promotion or seeing an advertisement. The average debt for Millennials is $45,000, which is the amount some of their grandparents paid for a home. By consolidating debt, you pay off credit card debt and enjoy the hidden benefits.
Qualifying to Buy a Home
Some young people don’t realize their credit card debt prevents them from qualifying for a home in their desired price range. By receiving credit counseling, you learn the tricks and tips for improving your debt-to-income ratio. When you have less debt and higher income, you position yourself to afford a higher mortgage amount.
Improving your Credit Score
Certified and trained credit counselors also fill you in on the secrets for improving your credit score. Most colleges don’t offer personal finance classes. However, your personal credit counselor will answer questions about the pros and cons of carrying credit cards and strategies for boosting a credit score or avoiding bad marks on your credit history.
Enjoying a Debt-Free Life
One incredible strategy is the debt-free approach. While it is not for everyone, you can decide to live without credit cards or loans. Learning to use a budget, paying off credit card debt and saving or investing are just a few things you can do. People who enroll in a debt management plan satisfy the debt obligations they have to various credit card companies. A reputable Christian credit counseling agency will work with you so you pay a lower interest rate. Knowing your exact timeline for paying off all credit card debt gives you a sense of liberation and freedom.
Other hidden benefits of the debt free life when you are young include more money to invest for retirement and money for your child’s college. When you no longer have a monthly debt management plan payment to make, you are able to allocate money for a 401(k) plan or Roth IRA. When you start saving young, you give your money time to multiply and grow. People who start saving young don’t have to save as much to retire with greater wealth compared to the late savers.
Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.