Inflation continues eating away at our take-home pay, and now a trip to the grocery store is becoming increasingly painful. Sadly, many of us are using credit cards to cope with the higher prices, and that’s turning into a real economic problem.
The New York Federal Reserve says that in 2023, the United States household debt hit a record high of $17.5 trillion. That’s mortgages, and everything added together.
To get a feel for how significant and alarming that number is, last year’s U.S. Gross Domestic Product was $27 trillion.
Last year, U.S. credit card debt topped $1.5 trillion, and the per-person credit card number was $20,000.
One person who had that much and decided she needed to make a change was Angela Davis of Detroit.
“It was more like a persistent, underlying stress,” said Davis.
Like many of us, Davis, a registered dietician, didn’t budget, racked up significant credit card debt, and found herself on the minimum monthly payment plan to nowhere.
“Maybe one day my bills are $500, this month and the next $600 because of interest so that insecurity of not knowing how much money I need to pay off the interest just became a rat race,” Davis said.
Doing an internship during the pandemic convinced her she had no choice and needed to attack her monstrous debt bomb.
A family member told her about Money Management International—a non-profit credit counseling service.
And she’s not alone, as spokesman Thomas Nitschsche tells Local 4 the line for their service is getting frighteningly long.
“We had 5,000 people go through our online counseling portal alone,” said Thomas Nitzsche. “We also operate a 24/7 call center, so it’s really concerning when we start seeing records broken that way.”
Only about 30% of those people end up on what’s called a debt management plan.
For $25 a month, they consolidate the debt into one lump sum and get negotiated lower interest rates. Make one monthly payment and pay off the debt in reasonably short order.
Also included is a financial education where budgeting becomes the norm.
Davis embraced it all and now owes only $8,000 and expects to get to zero by year’s end.
“I’m more disciplined now in terms of the choices I make, like decisions I make, travel, some things you gotta say not to,” Davis said. “I don’t need to have fancy, elaborate Christmases buying people all the things they want.”
To be clear, Money Management International is not the only non-profit credit counseling service out there, as Greenpath has been recommended for years.
There are others, but Greenpath and Money Management International are the two largest.
Considering how large the numbers are, there are many possibly facing bankruptcy. Credit counseling is the step to investigate before hitting the bankruptcy button.
Here are more tips to help relieve yourself from debt:
What Happens When You File for Bankruptcy?
10 Things You Should Know Before Filing for Bankruptcy
Everything You Need To Know About Personal Loans After Bankruptcy
