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National Get Smart About Credit Day falls in October, serving as an annual reminder for all of us to build healthy credit habits. The national nonprofit GreenPath Financial Wellness shares the following lessons one family learned as they firmed up their finances. As you’ll see in the story, being smart about credit, debt and borrowing is a key part of overall financial health.  

Matthew and Kendall’s Story 

Matthew, Kendall and their young family were under financial stress in years past. The monthly bills were piling up, and the couple found it difficult to manage everyday expenses on top of payments on more than $11,000 in high interest credit card debt. Additional debt of nearly $9,000 was in collections, impacting their financial health and credit scores. 

The couple realized that with a poor credit history, the cost to take on additional loans would produce higher interest due to their low credit scores.

Reaching out for help

A GreenPath debt management plan and budgeting support helped the couple get smart about their credit and reduce stress. The plan was tailored to their specific financial situation. New financial habits were designed to set aside money each month, and to help automate bill repayment. 

The results

The couple were able to pay off more than $11,000 in credit card debt and saved about $5,000 in interest charges – money they would have paid had they continued to pay the debt on their own. Along with the additional collection accounts, they paid off more than $20,000 in debt overall. A customized, easy-to-follow spending plan was put in place to build up healthy financial habits going forward.  

Newly debt-free, they were able to make home improvements to accommodate their special needs son. As Matthew noted, “If you’re struggling, remember that debt is not just going to go away on its own. It’s best to look at it head on and take action.”  

Lesson #1: Good financial habits pay off 

The couple learned that good financial habits make a big difference. The debt management plan helped them be more intentional about their credit card usage. In addition, by budgeting wisely, they now set aside money for savings to help them achieve their long-term goals. 

Lesson #2: There’s a smart way to manage credit   

Matthew and Kendall realized that paying only the minimum each month toward credit card debt extended how long it would take to wipe out debt and added to the amount of interest they paid. By using a debt management plan, they reduced the time to pay off their debt, and reduced interest charges they would have incurred if they handled the debt on their own. Following a debt management plan did take some discipline, but the reward was getting a handle on their credit. 

Lesson #3: You don’t have to go it alone 

For this couple, working one-on-one with a certified expert was a good first step. Advice and an action plan that provided tried and true strategies propelled Matthew and Kendal toward financial health with confidence.