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Boa line of credit disclousure Issuer: Credit Never a big spender, Emily was shocked when she noticed that her two credit cards had a combined balance of $10,000. What happened? Emily took a lower-paying job when the economy went bust at the turn ofthe millennium.Hoping her lower income would be temporary, Emily didn't sell her house toget one with a lower mortgage. She didn't sell her expensive car to buy acheaper one, since she would get much less than she had paid boa line of credit disclousure for it. Inreality, the thought of driving a less-nice car was painfulEmily paid only the minimum monthly credit card payment most months. Shewas paying interest, and interest on interest, buying the privilege of havingthe credit card company hold onto her debt another month.When one of Emily's credit card balances got within a few hundred dollarsof the credit limit, her interest rate on the card skyrocketed from 17 to 27%. Loans: Emily’s Salvation?Emily considered taking out a loan to pay off her credit card debt. She owned a condominium whose property values had increased 40% since she bought it, so she could easily get a good low-interest second mortgage.But a loan scared Emily: it would mean admitting her debt would not go away soon. Besides, Emily wanted to get rid of her debt, not trade (her unsecured debt for secured debt). Plus, she knew that if she ever couldn't pay the second mortgage, she would lose her house, while failing to pay credit card bills would just mean a ruined credit rating.For about a year, Emily argued with herself over whether to take out a loan to pay off her credit card. Then catastrophe hit: her beautiful car was totaled in an accident. While shopping for a new car with friends, Emily finally had to admit to herself that buying another car like the one she had had would be financial suicide.Finding an AnswerEmily cried and cried as soon as she got home from the car dealership that day. It wasn't just that she would have to admit that she wasn't someone who could afford the car she had been driving. When Emily's parents were her age, they had already bought a five-bedroom house; Emily's one-bedroom condominium was already a stretch. If she ever got married to a man with the same financial picture as she had, she wasn't sure they'd be able to afford children. Growing up, her parents had always told her she'd do better than they had. What went wrong?Emily did not have to think hard about what went wrong. Her father had been able to pay for college with what he earned at summer jobs, and then got a manager-level job straight out of school. Between college and graduate school, Emily had accumulated $70,000 in student debt that she was still slowly paying off. Houses in Emily's town, even adjusting for inflation, cost several times what they did when Emily's parents bought one. Cars had leaped in price about as much. The only thing that hadn't gone up was income. Unable to cope with having less than her parents had, Emily had used her credit cards.Solving the ProblemEmily knew that since her lack of financial skills had du g her into her rut, she would need outside help to dig herself back out. She had heard about credit counseling services that took large chunks of the payments you made against your debt, so she was careful. She found a counseling agency that was a member of the Better Business Bureau, American Association of Debt Management Organizations and whose credit counselors are certified through the National Institute for Financial Counseling Education. Doing a quick search on the web, Emily verified that these were organizations with real standards and not just empty names.Here's what Emily got from the credit counseling service: Relief. Emily was relieved to learn that her $10,000 credit card debt isin fact about average for Americans. The credit counseling agency showed herthat even if she didn't have the advantages she had–a decent job and homeequity–she would be able to rid herself of her debt if she just faced up toit.Surprise. The agency urged her to put money away for a rainy day fund,even as her credit card interest mounted. But once she started saving, shefelt amazing. She realized she had been under enormous stress from alwaysbeing one paycheck away from poverty.Understanding. The counselor understood Emily's reluctance to take out aloan, and helped her create a budget that would let her pay off herconsolidated debt within a few years. Besides the car, all Emily had to giveup were smaller expenses.Clarity. With her finances planned, Emily could think much more clearlyabout her financial situation. She figured out how much more money she wouldhave to make to have her desired lifestyle, and aggressively pursued a newjob. Starting fresh with her new coworkers, Emily focused on meeting peoplewho were less materialistic–and even met her fiancé. Though her fiancé has no better financial prospects, Emily's confident they can afford to give their children all the essentials she had, even if in a smaller house. After all, Emily knows that solid finances are just as good a shelter as a roof over your head. YES, I WANT TO APPLY FOR A Boa line of credit disclousure Back to the credit card center |
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