NORFOLK, Va. - The cost of living is outpacing a lot of people's income. When you consider inflation and high interest rates, paying off debt can be difficult.
Heather McAfee, a former Suffolk resident, understands that firsthand. The mother of two said life has been busy and quite expensive over the years.
"It's very hard when you have two children who depend on you," she said. "The financial stress was very difficult."
Five credit cards later, McAfee found herself swimming in $24,000 worth of debt.
"It kind of really forced me to take responsibility for my finances," she said.
She connected with the folks at Money Management International, a nonprofit credit counseling agency. She said they helped her pay down her debt in two years.
"We want to understand what the person's entire financial snapshot is, so we can make appropriate recommendations," said Thomas Nitzsche, Financial Educator and Senior Director of Media and Brand at Money Management International.
Nitzsche said counselors look at every bill, including cable, internet and groceries, and decide what's best for your lifestyle.
For McAfee, it was a debt management program.
"It's a hard call because you have to write down every bit of debt that you have and just and to see those numbers in black and white, you can't, you can't hide it," said McAfee.
Counselors negotiate with creditors to lower interest rates and consolidate accounts into one monthly payment From there, they develop a budget. McAfee, for example, paid about $650 a month.
So how much could you save with a debt management plan?
To give you a sense of what most consumers can expect to save with a debt management plan, however, here’s what the average client saved in 2021, based on the aggregated data of MMI’s real client base compared against the projected cost of making minimum payments (defined as 1% of the principle, plus interest charges) without the DMP’s reduced interest rates.
Nitzsche said the average client also increases their credit score by about 88 points.
"That's usually the difference between for poor and fair or fair and good. When somebody finishes their debt management program, they're usually in a much better position to buy that car, buy that home, whatever it might be," he said.
McAfee is now a homeowner in Richmond and her debt is behind her.
"This is the first time in my life, I don't have that pressure," she said.
McAfee zeroed out her debt in two years because she ended up making a lump sum, but the average client knocks out their debt in four years as long as they're disciplined in sticking to their plan.
Debt management programs aren't the right move for everyone which is why counselors work through solutions for you. They help you with everything from consolidation to settlement loans and even bankruptcy.