When Should You Seek the Advice of a Credit Counselor?

By Katie Rose Haustetler

Credit counseling is ideal for people who have been overwhelmed by their debts. A credit counselor will help you to get your finances under control. Before you chose a counselor, you should ensure that they are BBB accredited. A credit counsel is supposed to set you on a debt management plan so as to lower your interest rate and payments. There are various factors to consider before choosing a counselor. Discussed below are signs that you need to seek the advice of a credit counselor:

If You Are Struggling With Minimum Payments

Credit counseling is what you need if you can only afford to make minimum payments. When you only make the minimum payments, there is more debt accumulating as a result of the accrued interest. As a result, you will take a longer time to clear your debt; credit counseling will come in handy of you want to take control of your finances and eventually your life.

If You Make Blind Purchases

You should see a credit counselor if you do not know the total amount of debt you owe. This is as a result of not recording your purchases. Knowing the total amount of what you owe will help you control your spending. This is because you will minimize your purchases to prevent the debt from accumulating.

If You are Spending More Than 20 Percent of Your Net Income

If you spend more than 20 percent of your income to pay off what you owe, then credit counseling is for you. A professional counselor is able to assist you in making a good budget and also negotiate a lower interest for you.

If You Are Using Credit Card to Pay for Necessities

You should seek counseling if you are using your credit card to pay for your basic needs. A credit counselor is able to analyze your income and expenses to come up with a budget that will stabilize your finances. The counselor is also able to negotiate the suspension of payment with your creditor if your poor financial situation is temporary.

If You are Overwhelmed by the Debts

If your debts are too much and you feel that you can no longer afford to pay them, this is a sure sign that you need credit counseling. The counselors will advise you on how you can manage your finances.

If You Have no Savings

You should seek help from a credit card counselor if you do not have an emergency fund. Emergencies include illness or losing your job and they come with a lot of expenses. A credit counselor will give you tips on how to save.

If You Live From Paycheck to Paycheck

If you are living on paycheck then it shows that you spend more than you earn. A counselor will help you to come up with a budget that will enable you to live comfortably and allow you to save some money.

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