Credit Card Debt: When to Seek Help
- Author Linda Partridge
- Published November 12, 2011
- Word count 561
More Americans than ever need help with debt in these turbulent times. With chaos in the economic arena, unemployment creeping up, and inflation threatening, this is no time to be carrying the burden of credit card debt.
But who can help you out of the trap of high-interest card agreements when penalties and fees are mounting every day? A bank loan might let you breathe easier, but if your debt is substantial you're just delaying the day when the other foot drops.
Perhaps the first thing to do is take a good hard look at how much debt you really have.
Calculate Your Debt Load
With a low debt load, all you need is discipline and a good budget to take control of your finances. But if your debt load is too heavy, no matter how much you sacrifice you will not be able to pay off your bills on your present income. In that case, you will have to start looking for a professional to help with debt.
So your first step needs to be finding a number called your debt-to-income ratio. This is a simple calculation:
Add up all your monthly debt: rent or mortgage, credit card minimum payments, car loans, etc. Do not include monthly expenses, such as utilities, groceries, or gas.
Add up all your monthly income: salary, bonuses or overtime, alimony, etc.
Divide your total monthly debt by your total monthly income.
Go It Alone?
If the result is less than 49% (.49), then it's likely you can manage to start controlling your debt immediately, just by reducing your spending and increasing the amount you pay on credit cards each month.
The closer you are to that magic number, the more you'll have to give up, though. Just for comparison, a ratio of 36% is considered affordable for most people. As that ratio increases toward 49%, the harder it will be to manage bills in the face of job loss, divorce or illness. And in times like these, it's probably best to be as conservative as possible, striving toward a ratio between 25% and 35%.
And if your ratio is higher than 49%? Well, then you need to start considering who to turn to for help with debt.
I Need Help!
There are almost unlimited resources on the internet that you can contact for help with debt. Debt consolidators, debt settlement companies and debt relief agencies all work with credit card companies and banks to resolve their clients' debt problems.
Each represents a niche in the credit relief industry. Some will try to reduce the total amount you owe, while others will simply try to get you better terms on existing debt. Either way, you'll end up paying less interest and no penalties as long as you fulfill a new payment plan to reduce your debt.
It's worth researching each type to find out which one can help most in your unique situation. Most have toll-free numbers you can call for an initial free consultation. Just remember to ask questions and demand full information about the services offered and the costs involved. Do not allow yourself to be pressured into using a service—a hard sell is a red flag in this industry. It is very important to also verify the organization's standing with the Better Business Bureau and the Attorney General of your state and the state where the company is registered.
Linda Partridge enjoys writing about a variety of topics affecting everyday life, including personal finance.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- BNPL vs Traditional Lending: Which Is the Better Option for Today’s Consumers?
- Personalized Loans 5 Things you Should Consider Before Applying
- Best Credit Card for Cash Back on Gas: Fuel Your Savings
- Mwananchi Credit Highlights The importance of Teaching Financial Literacy In Schools
- Porchlio's Rent Affordability Calculator: Your Key to Smart Renting
- What is SMB Funding?
- Cash USA | Quick & Easy Loans
- How Can a Private Loan Help Your Cash Flow Situation
- Business Line of Credit: A Lifeline of Your Financial Needs!
- Unsecured Small Business Loans in Australia
- Working Capital Loans: Everything you Need to Know
- Small Business Cash Advance Loans - Fast and Easy
- Things Not to Do When Building Business Credit
- Why Small Business Loans Do not Get Approved
- How to File Great West Life Benefit insurance Claim
- My encounter with the heartless corporate America @ChaseBank
- Are low doc home loans still available in Australia?
- Think Due Diligence Before Acknowledging That Loan Offer
- Tie Up Your Financial Loose Ends! The Importance of Managing High-Interest Loans
- Understanding cash flow vs. asset-based business lending
- Debt Consolidation Loan or Debt Counselling in South Africa
- Credit cards with bad credit wired to a prepaid debit card
- Insurance Financial Producers Articles - A Superstar Success Story Cannot Teach Me Anything
- Three Quick Tips From the Canada Revenue Agency on Tax Filing
- How Crypto Loans Work
- 4 Reasons why it is Beneficial to make a Down Payment for your Car
- Is the Process of Buying a Car Worth your Time?
- How to Consolidate Credit Card Debt During Covid-19
- Conglomerate Merger: Pros & Cons
- Signs That You Are Doing Budgeting Wrong