Freedom Debt Management: Your Best Option for Credit Solutions?
Freedom Debt Management is a non-profit organization that offers a variety of credit counseling services. It’s a free service offered to help consumers manage their debt. Consumer debt has been out of control for the past few decades and debt management and credit solutions companies like Freedom Debt Management are popping up all over the place.
The question is whether or not these debt management companies actually offer credit solutions that make a difference in the lives of their clients. Just because a service is free, doesn’t mean you will save money or eliminate debt using it.
Freedom Debt Management
Freedom Debt Management advisors have a variety of options to help their clients take control of their credit issues. The services they offer include:
- Budget Counseling
- Credit Report Analysis
- Improved Credit Over Time
- Bill Consolidation
- Debt management Programs
- Foreclosure Prevention
- Educational Courses
One of the issues found when researching Freedom Debt Management is that they seem to have a focus on debt consolidation. This is a strategy that is used excessively by almost every credit solutions company you can find.
Credit Solutions: Consolidation
It’s not a bad idea in principle. Consolidating your loans makes sense. If you can take higher interest credit cards, lines of credit, car loans, and other liabilities and move them to a single account with lower interest rates, it sounds like a wonderful credit solution and great way to approach debt management.
You pay less interest on debt, lower monthly payments, and it’s a lot easier to manage one account than to keep track of multiple credit cards and other consumer debt.
However, there are some big issues. Often the lower interest consolidated loan, has a substantially longer term. This can create two problems.
- You remain in debt a lot longer.
- Less interest for a long enough time period can mean more total interest.
Consolidation as a credit solution can significantly increase monthly cash flow. The problem is that most people do not know what to do with the extra cash. Thankfully Freedom Debt Management makes an effort to educate consumers and help them in this regard.
Education is key, and the credit solutions that Freedom Debt Management offers are one important part of the education required to properly manage your finances. They are just one part, however. Freedom Debt Management does not appear to have the expertise to educate clients regarding the best investment strategies.
Freedom Debt Management: Credit Solutions Challenge
Perhaps an even bigger issue with a focus on consolidation for debt management is the psyche of the modern consumer. We are a people of instant gratification who think ‘willpower’ means waiting until after work to buy a six dollar coffee at Starbucks (with a credit card) rather than going to get one during our mid-afternoon break.
Consolidation as a credit solution runs a huge risk of the client going back to their old habits and continuing the same debt management strategies that got them in trouble in the first place.
The challenge of Freedom Debt Management and other credit solutions companies is to make sure they do not offer debt consolidation solutions to people who can not, or do not know how to discipline themselves enough to stick to their new plan.
Otherwise they may end up with new consumer credit card debt and a consolidation loan…worse than they were before implementing their new debt management and credit solutions strategies.
For true financial freedom, debt management is crucial. Companies like Freedom Debt Management can help with part of the problem. Just remember, financial freedom requires more than just debt management…
- Debt management solutions.
- Asset management and protection.
- Tax management solutions.
- Credit maintenance and repair.
- Investment solutions and investment management.
- Estate management and planning.
All of these things and more play a crucial role in engineering a life of financial freedom. Companies like Freedom Debt Management can play a role, but they do not offer a complete solution.
If you want credit solutions only, Freedom Debt Management may be of help. If you are looking for a complete financial management solution, Freedom Debt Management has part of the debt management piece of the puzzle. You’ll have to look elsewhere for more.
Roderick MacKenzie is a Top Tier Wealth Consultant and Financial and Investment Editor at BusinessTM. He runs a wealth education company focused on helping the average hardworking citizen access the financial management, business, and investment education that is typically reserved only for the ultra rich.
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