No one wants to get to the point where
they have fallen so far into debt that they have to consider bankruptcy as
their only solution. Everyday, thousands of consumers find themselves deep in
debt, and they can’t figure out just how they got there. How could they miss
the warning signs? Were there steps they could have taken which could have
prevented these problems? Unfortunately, many don’t know what to look for.
Luckily, there are resources such as consumer credit counseling services, that
can help create debt management plans to get individuals back on track and
teach them ways to recognize when they are slipping out of control.
The Key to Effective
Debt Management is Prevention
Reputable credit counseling services
know that “an ounce of prevention is worth a pound of cure.” They advise that
it is much easier to prevent a bad financial situation from occurring in the
first place than trying to work your way out of financial disarray. Recognizing
the warning signs early on and having a debt management plan is critical to
staying in good financial shape. If you can create and maintain your own debt
management plan now, you will be saving yourself from potential financial
problems in the future. You can hire credit repair company during this period
because of they help you in Debt management as well as improve your credit score.
The Numbers Tell the
Story – How Americans are Managing Their Debt (or not)
·
The American Bankruptcy Institute reports that in 2004, there
were over 1.5 million personal bankruptcy filings.
·
According to the VIP Forum Analysis, those who owe more than
$10,000 on their credit cards (greater than 36%) have household incomes under
$50,000.
·
The median value of total outstanding debt owed by households
rose 33.9% between 2019 and 2020.
What are the Warning
Signs?
Identifying the warning signs of poor
debt management planning is the first step to correcting it. It is important to
be honest with yourself. Are you contributing to your debt management issues
without realizing it?
Ask yourself the following:
1. Are
you unable to pay your creditors on time and are starting to receive collection
calls?
2. Are
you living paycheck to paycheck? Do you have little or no money put aside in a
savings account?
3. Are
using a significant amount of your monthly income to pay toward your debt
(Generally more than 20%)? (This does not include mortgage payments).
4. Do
you often use credit cards or borrow money for items that you used to purchase
with cash?
5. Can
you only afford to make the minimum monthly payment on your credit cards? Or
are you skipping some payments in order to make other payments on time?
6. Have
you taken out new loans to pay off existing debts?
If you answered yes to any of these
warning signs, consider seeking debt management or budgeting help from a
professional consumer credit counseling service. These types of consumer credit
counseling services can also help you determine whether or not behavioral
issues (such as gambling or compulsive shopping) might be a contributing factor
to your debt.
Do you ever spend time worrying about
debt management issues? The term “financial health” can have a dual meaning. If
you are constantly stressing over financial matters, it could have a negative
effect on your general health and well-being. Don’t let debt management issues
spill over into other aspects of your life. Always try to remember that you can
remedy almost any situation, and that help is available from Credit Repair
services if you ever feel like you need it.
Calculate your Debt
to Income Ratio
This simple formula can be a big help
in giving you a reference point from which to judge your debt situation.
Consumer credit counseling agencies use this formula to help individuals decide
the severity of their debt problems, and lenders often use this formula to
decide whether they will grant or deny a loan to an individual.
To determine your Debt-to-Income ratio,
simply take the total amount of monthly debt payments (excluding mortgage or
rent), and divide that number by your total monthly income. When you convert
the result into a percentage, you will have a number that you can use as a
reference point. If the percentage is over 20%, you should take note of this
and try to figure out how you can reduce the number. A reputable consumer
credit counseling service is well equipped to help you develop an action plan
to get you back on track and keep you from falling further into debt.
Seek Help From a
Credit Repair Company
The best thing you can do to relieve
some of the stress caused by financial debt is to talk to someone – never keep
things bottled up inside. Talk to your friends and family members for support.
If don’t feel comfortable sharing your personal financial matters with them,
you can contact a professional Credit Repair Company for advice on budgeting
and, if it becomes necessary, you can start
on a debt management plan.
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