Are you feeling weighed down by credit card debt? You are not alone. According to a May 2024 National Public Radio report, about one in five cardholders are using 90% or more of their available credit, meaning they are at or near their limits.
Most people don’t choose to fall into debt. Emergencies, job loss, illness, or limited savings make it harder to absorb financial setbacks. Most are doing the best they can with what they have and what they know.
As a financial coach, I often meet people who wait until they are overwhelmed by their finances before they are willing to act. By then, creditors are calling, debt feels overwhelming, and stress is high, making solutions and options seem limited and unclear.
But there is hope.
If you feel overwhelmed, focus on one actionable step to regain control rather than trying to fix everything at once.
Start by getting clear on what you owe. This could include making a detailed list of all debts, specifying the company name, account number, balance, minimum payment, and customer support contact. You cannot create a plan until you know exactly what you face.
This step can feel daunting. Many people avoid it out of embarrassment or fear. However, clarity reduces anxiety and provides a clear starting point.
Next, list your income. Understand each monthly source so you know what’s available for expenses and debt.
If you are struggling to make payments, do not avoid your creditors. Call your creditors and explain your situation. Ask about lowering your interest rate, financial hardship programs, or adjusted payment plans.
Many creditors are willing to work with you.
Know your legal protections. The Consumer Financial Protection Bureau and the Federal Trade Commission outline what debt collectors can and cannot do. You have rights, even when you are in debt.
If you’re feeling stuck or overwhelmed by debt, there are nonprofit organizations that can help you work through it, including the National Foundation for Credit Counseling and American Consumer Credit Counseling.
These organizations have certified credit counselors who will look at your situation with you, help you understand your options, and in some cases, work directly with your creditors. This can include simplifying payments, lowering interest rates, or reducing fees through something called a Debt Management Plan.
Most consultations are free, so this can be a really good place to start if you’re not sure what to do next.
Be cautious with debt relief or consolidation companies, as most are for-profit. Some charge significant fees, often equivalent to a large percentage of the debt enrolled in their service program.
They may also instruct you to stop paying your creditors, which can damage your credit and result in accumulated interest.
Many people don’t realize that creditors often offer programs to help customers who have fallen behind and may be willing to work with you. Often, you can negotiate directly with your creditors and may receive repayment or settlement options that are similar or better without a third party.
After these steps, focus on building a simple spending plan and avoiding new debt. A clear plan helps you stay in control of your money before you spend it and adds structure to your finances.
You don’t need a perfect plan, just one you’ll follow. Focus on progress.
Start small and take the first step.
Renee Chapman (Sangermano) is an Accredited Financial Counselor (AFC) candidate and founder of Climb Higher Financial Coaching, where she helps individuals and families navigate budgeting, debt and everyday financial decisions.