Bills can be beat Discipline, budgeting are key

Topeka Capital-Journal, The, Jun 20, 2004 by Ryan Malashock Capital-Journal

PAYING DOWN DEBT

PHOTOGRAPHS BY ANN WILLIAMSON/THE CAPITAL-JOURNAL

Consumer credit counselor Chris Burk talks with a client at Housing & Credit Counseling Inc., 1195 S.W. Buchanan.

Clients are required to cut up their credit cards.

By Ryan Malashock

THE CAPITAL-JOURNAL

When Jeff Carson and his family moved back to Topeka from California eight years ago, bills piled up quicker than cash was deposited into his bank account. Not only that, an appliance would break or a car would refuse to start, and Carson had no clue how to pay for the accruing expenses.

So, he turned to credit cards.

"They were so easy to get, and they were a quick solution for us," Carson said. "I don't think we knew enough about how expensive it is to live."

One of the reasons the Carsons were challenged financially was because he and his wife depended on him to be the main provider while she has stayed home with two daughters. Worse yet, the move to Topeka brought a pay cut.

Faced with debt in the tens of thousands, Carson's family finally came up for air four years ago. Carson was making more money, and he wanted to get serious about paying off the debt.

His commitment led him to the Consumer Credit Counseling Service, part of Housing & Credit Counseling Inc., 1195 S.W. Buchanan, which also has offices in Emporia, Lawrence and Manhattan. Carson received counseling on budgeting, debt management and saving. After the first meeting, Carson joined the organization's debt management program.

Counseling service

More than 1,150 people are involved in Consumer Credit Counseling's debt management program, a process that takes anywhere from six months to five years, according to Katy Lenahan, of the Consumer Credit Counseling Service. As part of the program, the service combines debts and accepts a monthly or bimonthly payment --- all for a $25 fee.

A large group of the people being helped are college students or recent college graduates, but school teachers, doctors and lawyers are also part of the program, Lenahan said.

Part of Lenahan's job deals with the time leading up to a possible debt crisis. The service offers free classes on budgeting, a tool that Lenahan said many people lacked.

"So many people don't have a lot of financial literacy, and it's really not their fault a lot of times," Lenahan said. "A lot of times we see that their parents may not have known how to manage money, and it's not really taught in schools."

With budgeting, the Consumer Credit Counseling Service stresses writing out a detailed, expense-by-expense monthly budget, accounting for all needs before any material wants.

College students have the most difficult situation, Lenahan said, considering the barrage of credit cards offered on campuses and necessary student loans.

Lenahan has seen consumers with debts on as many as eight credit cards and said no situation is too desperate.

Even if a debt payment is included in a person's monthly budget, the Consumer Credit Counseling Service still recommends that some amount of money be stashed away each month.

"We make sure to tell people about thinking for the long-term instead of the short-term," said Marilyn Stanley, housing division manager and former credit counselor. "It's best to try not to live paycheck to paycheck and make savings a priority."

Almost paid off

Carson, 44, began making a monthly debt payment --- equaling a "handsome mortgage payment" --- about three years ago. He has one more year of payments, but he has established good credit by paying on time and staying on budget.

Through the help of the Consumer Credit Counseling Service, he said, he was able to finance a home, borrow money and start a new company.

"We can finally see the light at the end of the tunnel," Carson said. "By being on a plan and knowing exactly what we owed when, we got on the right track to getting out of debt."

Ryan Malashock can be reached

at ryan.malashock@cjonline.com

or (785) 295-1180.

MONEY

MANAGEMENT

- Write out a detailed monthly budget.

- Prioritize needs first and wants second.

- When paying off debt, always pay more than the minimum.

- Shop around for the best deals and interest rates when applying for credit cards.n Don't "buy now, think later."

SOURCE: Consumer Credit Counseling Service, which is part of Housing & Credit Counseling Inc., 1195 S.W. Buchanan, 234-0217.