Debt consolidation helped me get out of debt and it was a very positive experience. The first time I ever heard about credit card debt was as a teenager. The mother was determined to keep up with The Jones’ even though the family was living from paycheck to paycheck. “The Jones'” were people at the mega church she attended. In order to keep up she applied for more and more credit cards. Things went from bad to worse and eventually bankruptcy was filed. Even back then I felt it was the wrong thing to do. It felt like stealing, to me. I decided I would do my best to never have to file bankruptcy.
About ten years later, I was a young divorcée with two small children, on welfare. But since I’d been employed for years prior to losing my job, I had great credit. And an old car. That kept breaking down. Again and again. And again. And sometimes we’d run short on groceries, so I charged a few dollars here and there. Or maybe one of my children needed a new (second hand) shirt or pair of shorts from Goodwill or Savers. I have always been frugal, but after a few years of car repairs and this and that, here and there, my credit card debt had risen to $6000. I felt in a panic because I was on such a tight budget being on welfare with food stamps, and I felt like I couldn’t stop myself from using the credit cards for “emergencies”.
I decided to check into debt consolidation. More than a decade ago there were not too many places to choose from, and they were mostly non-profit organizations.
The debt consolidation company asked me to write down all my bills, and how much I spent on groceries, sundries, clothing, etc. As it turned out, with a budget that was so tight it squeaked, I could manage $150 every month. This company preferred repayment within four years, but since I couldn’t afford even a dollar more they extended my payment plan to 52 months. As with most debt consolidation companies, there was a fee charged each month to process the various payments. However, taking my budget into consideration they lowered their standard fee to $6 each month.
I was asked to cut up all my credit cards, and signed a contract stating I would not sign up for any more credit cards until my debt was paid in full.
It was difficult, especially after my car broke down yet again. The repair was going to cost close to $2000 and since I did not have credit cards to get it fixed we simply had to do without. We lived in the city and used public transit and our bikes to get to the store for grocery shopping and anywhere we needed to go. In fact, I look back at that time in my life with fond memories. Life was slower then, and I had a lot more time.
After 52 months, my debt was finally paid in full. It was an awesome feeling to be debt free.
Have you had an experience with debt consolidation? I’d like to hear your story.