Free financial counseling led to single mom's improved credit and ... - Star Tribune

Julie Schellack credits free financial counseling with putting her in a position to buy her first home last year.

She heard about the counseling from Lutheran Social Service of Minnesota through an email from her employer, Hennepin County, and thought it could help her.

Even after just one meeting in 2019, financial counseling supervisor Dan Park helped her turn her finances around. "He gave me the tools and knowledge I needed to play an active role in my own success story," Schellack said.

Park was recently named national credit counselor of the year by the National Foundation for Credit Counseling out of thousands of candidates across the nation.

According to Lutheran Social Service, its certified credit counselors equip people to overcome credit card debt, achieve homeownership, save for rainy days and retirement, and manage student loans.

The Financial Planning Association of Minnesota is another free resource aimed at those with few assets and incomes at or below 80% of the local median income, the federal income limit for public housing eligibility. That's $83,200 for a household of four or $58,250 for a single household. The income limits may be waived in some cases.

For Schellack, the financial counseling was life-changing.

"I couldn't believe there was free financial counseling and I didn't have to pay for it," said Schellack, 38. "That was mind-blowing for me."

During the 2019 meeting, Park found that her credit score was below average.

The news was disappointing but not a complete shock. "I knew I had an outstanding judgment against me, a credit card in collections, and so we talked about what I needed to do," she said. "He explained it to me in a way that I would understand."

First, Park advised her to settle the judgment against her for around $1,800. Next, Schellack obtained a secured credit card with a $400 deposit and began to pay her bills on time every month to improve her credit score.

Park also helped her enroll in a public service loan forgiveness program for her $30,000 in federal student loans. The loans will be forgiven after 10 years of payments. Schellack has another $20,000 in private student loans as well. "I went into social work, and it's like teachers — it's not a job that pays super well," she said. "That's not why I went into it."

Park said there are many reasons that people accrue overwhelming debt.

"Sometimes it's a matter of being underemployed. Sometimes it's an emergency that wasn't planned. They had to go into debt to eat," he said. "There are situations where the spending is reckless."

Schellack said she struggled with managing money after addiction and depression.

But in October 2021, after building her credit up, she purchased her first home, where she and her daughter now live.

Feeling she should be able to solve her own financial problems, Schellack was initially reluctant to get help but sees things differently today.

"Anybody who feels like their finances could be in better order but they don't know how or what steps to take, I would totally recommend getting free financial counseling," she said.