Take Charge America Puts People on Paths to Climb Out of Debt and Improve Their Financial Well Being

In a Nutshell: For more than 30 years, Take Charge America (TCA) has been helping consumers understand and manage debt to improve their financial circumstances. We recently sat down with TCA consultant and former Director of Education Mike Sullivan to get to the bottom of how the nonprofit does it. Mike told us how the organization’s expert counselors are able to give people a comprehensive view of their personal finances and create budgets based on income, expenses, and statistical data centered around spending habits. After speaking with Mike, it’s easy to see TCA is in the business of empowering people to bolster their financial health through guidance and educational resources.

Mike Sullivan remembers countless thank-you cards, flowers and baked goods arriving at his desk as Director of Education for Take Charge America (TCA) for 13 years. He also remembers the time the flowers went the other way — when he was so moved by clients’ ability to work out of debt in dire circumstances, he sent them flowers.

Clients’ notes cover the walls at the entrance of the TCA headquarters in Phoenix, Arizona, to remind employees of their mission, said Mike, who retired from the nonprofit credit agency two years ago but is still a consultant for TCA. Such notes say, “For the first time in my life, I’m out of debt. I have a balanced budget.”

Established in 1987 under the name Credit Counselors of America Inc., TCA was formed as a result of lender interest in improving consumers’ credit card repayment ability. According to Mike, the organization is “an educational charity with a financial mission.”

The nonprofit changed its name to Take Charge America in 2003 and now has 84 employees, all but two of whom are based in the Phoenix office.

TCA’s central focus has always been on credit card debt, and still is, but when the recession and housing market collapse hit, the organization saw the need to help in additional areas. “When people started losing houses, [we] started a housing unit,” Mike said. “Student loans became a prominent issue after that.”

Today, TCA has debt counselors covering student loans, housing, debt management, and financial education. The organization has helped more than 1.6 million people repay more than $6 billion in debt and has received an A+ rating from the Better Business Bureau and the Business Ethics Award for ethical business practices and integrity.

Counselors Create Data-Driven Budgets for Consumers

Consumers seeking strategies for paying off credit cards or managing finances can contact a TCA counselor for a free, confidential financial assessment. Credit card and student loan counseling are available nationwide, and housing counseling is available in Arizona to first-time homebuyers and homeowners facing foreclosure.

After counselors complete a financial assessment, a profile is created that gives a comprehensive picture of debt rather than just the bottom-line figure, Mike said. For example, a client with $35,000 in student loans who is working a part-time, $11-per-hour job is in a worse situation than a medical school graduate with $100,000 in loans.

They plug in the client’s salary, rent, other expenses, and dependents and cross-check the data with statistics on the Bureau of Labor Statistics to gauge whether or not clients are overspending — an important issue to vet early on in the process.

“We cannot always find out what’s going on in their lives, so we ask them to send us bills,” he said.

Once TCA counselors have gathered all the necessary information on clients, they send them their actual budget, along with an ideal budget that the counselors themselves have come up with based on the clients’ financial goals and priorities and any spending habits the clients need to work on.

Some clients pay TCA for an added layer of oversight in the form of debt management, where TCA counselors are the intermediaries between clients and lenders. Consumers enrolled in debt management plans with TCA may receive concessions, including reduced or waived fees.

Helping Diverse Clients Understand and Repay Debts

Clients of TCA run across a wide demographic spectrum — from newly graduated students facing a mountain of loans to repay to seniors who are still paying off those student loans with Social Security. But most clients are in their thirties and early forties — the years Mike told us the average person in America starts to pay off student loans, take a mortgage out, and have families.

TCA tends to hear more from women than men, and more typically from those in the middle-class income bracket with an annual family income between $50,000 and $70,000 per year.

TCA’s debt management plans are designed so consumers can pay off their debt in five years or less. During this period, enrollees can seek advice from TCA counselors whenever they like.

The vast majority of people contacting TCA call in about debt, while only about 10% of the clients have immediate concerns over their credit.

“They often don’t even know how bad their credit is,” Mike said. “As we work through the program, we explain that it’s challenging to build credit when you have a lot of debt. You have to take care of debt problems before you take care of the credit issue.”

Counselors also work to dispel what Mike says is the number one misconception: that owing money improves your credit score.

“There is no situation where debt is much of an advantage,” he said. “The risk is if you don’t pay it off you can accumulate interest. Sometimes debt is necessary to buy a house or car or go to college. It’s necessary, but that doesn’t make it good.”

Credit card debt is still the largest source of debt counselors help people with, followed by mortgages and student loans.

“You can’t file for bankruptcy and get out of student loan debt,” Mike said. “You can walk away from mortgage debt, and they’ll take your home. But there’s not much you can do [about student loans]. Sometimes we can find (income-based) repayment options, but it’s harder to give more meaningful advice than for credit card or housing debt.”

Compassionate Experts Who Understand Consumer Need

TCA provides counselors who are certified by the National Foundation for Credit Counseling (NFCC). All TCA counselors receive the same training and are equipped to help consumers with a wide range of issues. Mike told us TCA’s training and testing program is “very extensive and strenuous,” and that TCA prefers people with a background in finance and the credit card industry.

The organization’s representatives have to know how to counsel people in managing money, overcoming debt, and throwing out bad financial habits. The goal is to develop strategies that move toward a sound financial future and change perspectives on financial management as it relates to relationships with family, friends, and even their own self-esteem.

“There’s a very strict quality control,” Mike said. “We’re proud of our counselors.”

That pride is not just because of TCA counselors’ competence but also a result of their compassionate nature.

“The people who work for us want to help people,” Mike said. “They’d make a lot more money working for a mortgage company, but they would much rather help people than harass them.”

Mike knows this first-hand. A former high school English and social studies teacher in Indiana, with some background in family counseling, he learned about debt and financial issues “the hard way,” when he had a family to support.

“I became convinced that there was a way to advise people to do this,” Mike said.

He later worked for a company developing educational materials on business and finance, which is when he learned about TCA. The warmer Arizona climate lured him from the Midwest, and he’s been working with TCA ever since.

“This is a nice outlet for someone who likes to people and understands money,” said Mike, who also volunteers at the local Habitat for Humanity.

A Charitable Mission To Provide Financial Education

Like many nonprofits, TCA may or may not make a marginal profit from year to year.

“We’re a charity. Our primary business is to help people. Most of the people who call us (80%) never pay us a dime. They get free counseling and advice,” Mike said, adding that the others pay a small monthly fee for debt management. Clients also receive educational resources, such as budgeting software and e-learning courses.

TCA is primarily funded through grants (more state than federal), HUD money for housing, or money from lenders with specific missions such as educating veterans and helping homeless teenagers or abused women. Last November, TCA received a $4,000 grant from Cox Charities to counsel kids aging out of foster care on finances. In 2015, they gave 44 presentations to 1,500 at-risk youth in the area.

TCA also has joint ventures with groups like the YMCA and United Way, and it has funded initiatives, such as the TCA Institute at the University of Arizona, where they’ve held competitions on finance for high school and college students. In all, the organization has partnered with more than 50 community groups across the U.S.

TCA is a vibrant local source for financial education. “We go weekly into schools, employers, and government agencies and provide free classes on personal finance topics,” Mike said.

With charitable work like this, TCA may need bigger walls to post all the notes thanking the organization for empowering consumers to take control of their finances.