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Top 5 Reasons People Seek Credit Counseling

Since 1987, we have helped thousands of people overcome financial challenges through Credit Counseling and other programs. As a nonprofit, we are committed to educating our clients and the general public on ways to spend less, save more and work toward becoming financially fit. Over the years, we have had clients seek Credit Counseling for a wide variety of reasons, but certain life events keep coming up again and again. Here are the top five reasons people seek Credit Counseling and some things you can do if you find yourself in any of these common situations.     young woman on the phone getting credit counseling

Loss of Income or Reduced Income — Few things are as stressful as losing a job or being told you have to take a pay cut to keep your job. You’ve built your lifestyle based on receiving a consistent income and suddenly it disappears or gets smaller. If you don’t have savings to fall back on, you’re immediately in financial crisis mode. Taking the following steps can help ensure you’re ready if you experience lost or reduced income:

  • Work toward having 6 months of living expenses in an emergency savings account
  • Keep your resume´ up-to-date and maintain contacts with potential employers
  • Develop a marketable skill that will allow you to temporarily freelance if needed

Unexpected Expenses — Whether it’s a major home repair, car repair or even something fun, like being asked to stand up at a friend’s wedding, unexpected expenses are a part of life. If you’re not ready for them, they can throw your finances into a tailspin that’s hard to get out of. But even though you can’t predict the future, you can take steps now that will make unexpected expenses less shocking:

Overspending — Whether as a result of relying on credit cards to pay for everyday expenses, spending more than you earn or carrying balances on multiple, high-interest rate credit cards, overspending is a cause for concern. When credit card debt becomes unmanageable, your life can feel like it’s spinning out of control. Here are some ways you can help control the urge to overspend:

  • Try your best to live a cash-only lifestyle; don’t carry credit cards with you
  • If you do have to charge something, pay the balance in full the following month to avoid paying interest
  • Steer clear of retail store credit cards and other credit cards that charge interest rates of 20% or more

Illness in the Family — Serious illness and the high medical bills that accompany it are incredibly stressful for any family. While there’s no way to predict when an accident or illness will strike, there are some things you can do to lessen the impact when they occur:

  • Work toward having at least 6 months of living expenses in an emergency savings account (see a pattern here?)
  • Ensure all health insurance premiums are paid on time so there’s no lapse in coverage
  • Try to live a healthy lifestyle and practice preventive care

Divorce or Separation — Since money issues are one of the leading causes of marital strife, it’s no surprise things can get quite complicated when working out the financial details of a divorce or separation. Here are a few tips that can help you get through this difficult time:

  • Find a lawyer you’re comfortable with and who answers questions quickly
  • Seek the support of friends and family members who have been through a similar situation
  • Check your credit report for errors regularly to ensure it’s not reflecting your spouse’s debts

When these or any other financially stressful life events arise, we are here to help. Our free, confidential Credit Counseling is always the first step. Once we get to know you and assess your situation, there may be additional services we offer to help you get back on solid financial ground.