This July 4, credit unions across America and the National Foundation for Credit Counseling (NFCC), in the spirit of Independence Day, challenge Americans to declare their own personal financial independence by making a commitment to become debt free
“The stress of unmanageable debt has destroyed marriages, shattered families and contributed to lost jobs,” said Gail Cunningham, NFCC spokesperson. “No one ever scripts financial ruin as a part of their life plan, but when financial distress occurs, it is a very real part of a person’s daily activities, as debt is a burden people carry with them 24 hours per day.”
Aside from the personal problems associated with debt, there are these reasons to take action and begin resolving your debt issues:
- A blemished pay history reflecting late or missed payments tarnishes a person’s credit report, which could result in a lower credit score;
- A low credit score often results in a higher interest rate when borrowing money, making the cost of credit more expensive;
- A tarnished credit record could diminish access to additional credit needed for emergencies or unplanned expenses;
- With an unrealistic amount of money earmarked for debt repayment, saving and investing are often neglected, and
- Planning for future needs such as college or retirement is often delayed.
Consumers may mistakenly think they are responsibly managing debt by making the minimum payments due on time every month. They don’t bother to calculate how long it will take them to become debt free, or how much they will have paid in interest.
Consider: With a $10,000 credit card debt at 18% interest, even if no additional purchases or fees are added to the account, and the card holder makes monthly on-time payments of 2% of the balance, it will take 48 years to pay the balance. That original debt of $10,000 will cost $36,825, with $26,825 going toward interest. Compound interest can make debt much harder to overcome.
Connect with your local credit union to get more information about becoming financially independent from debt and fees! See the whole Money Possible: Debt Destroyers series for extra tips, advice and real world experiences from consumers like you. Find a credit union you are eligible to join at asmarterchoice.org and get the personalized financial counseling to be independent from debt!