February 12, 2015

Debt Consolidation

If you have a low net worth, it doesn’t mean you are a bad person. But steadily building up your net worth is a prudent and wise way to prepare for retirement and provide for loved ones after you are gone. Many people in debt don’t realize they can immediately begin to fix their net worth problem through debt consolidation. By paying on a Debt Management Plan, the negative side of your net worth equation shrinks so you have more money to save on the positive side. According to a recent piece by The Motley Fool, a lot of people don’t realize what their net worth number is. By receiving credit counseling, you will learn not only how to budget but how to figure out where you stand in terms of household net worth. Simply put, your net worth is all of your assets or money minus your liabilities or debt. As you pay off debt and save more, your total net worth increases.

Calculating your worth

Financial experts say your self-worth does not equal your net worth, but it’s important to take your financial “temperature.” When you have a lot of credit-card debt, medical debt and unsecured loans, it’s difficult to get ahead. To figure out your net worth, a trained and credit counselor will have you calculate your total debt. If you owe money on a mortgage, you would put the amount still owed on the liability side while the current value of the home on the asset side. Unless you are underwater on your mortgage, your home will be an asset instead of a liability.

Knowing how you compare

According to The Motley Fool, it’s helpful to know how you compare to other people your age. If you are curious, the Census Bureau reports that people under the age of 35 with a net worth of $6,682 are in the 50 percentile while a net worth of $33,477 would put you in the 70 percentile, meaning you have more money or assets than 70 percent of people your age. If you are between 35 and 44, having a net worth of $35,000 puts you in the 50th percentile and a net worth of $128,430 puts you in the 70th percentile.

Eliminating the bad debt

The reason some people consider a home mortgage “good debt” is because it’s an investment that has the potential for positive equity that increases your net worth. However, credit-card debt is rarely considered a good debt. With a Debt Management Plan, you can make one monthly payment to satisfy your creditors. Of course, it starts by talking to a trained credit counselor. The team at Christian Credit Counselors has experience negotiating with more than 400 creditors to lower your interest rate and fees with debt consolidation.

At Christian Credit Counselors, our certified credit counselors don’t judge you or your situation. We have a proven track record of success in helping our clients get out of debt and stay out of debt due to education.

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.

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