Is Your Debt Becoming a Problem?
Almost everyone has some level of debt. Debt in itself is not necessarily a problem as long as it is under control.
Experts classify problem debt as a person being in debt crisis but does this apply to you? Are you technically in debt crisis or is you debt simply a concern?
Are you having problems paying the normal monthly outgoings? These include your rent or mortgage, energy bills and the minimum payment on your credit cards.
Not including your mortgage, is your debt larger than a year’s income (after tax)?
If your reply to either of these questions is “Yes” then you are likely to be in debt crisis. You can have large debt without being classified as being in debt crisis. As long as you can pay them each month, even just the minimum payments, then you’re not technically in debt crisis.
Whether you’re in debt crisis or have problem debts it is important that you don’t ignore the situation. Whatever the reason for your debt, you need to get things sorted.
The first step is to reduce your spending. This is not just to keep you from borrowing more but also to make your repayments more effective.
You need to understand how you ended up with large debts. For example if you borrowed for a large purchase such as a car but found a good deal on the borrowing then you know how you got to this situation. Your circumstances may have changed and it put you under financial pressure. Perhaps you lost your job or had your hours at work reduced and this effected your monthly income.
However if you don’t really know how you got into large debt then you need to be honest with yourself. Did you just charge everything to your credit card and lost control of your spending? If this is what happened to you then you need to examine and change your spending behaviour.
Debt and credit consolidation can help. Moving the debt to a cheaper loan will reduce the monthly repayments.
You need to work out a practical budget and stick to it.
Credit counselling can be very useful to find out how to get out of debt. If debt consolidation isn’t enough to sort out your problem then there are other options.
There are debt relief services that can help you to work out which solution is best for you. They could advise you on Debt Settlement and help you to negotiate with your creditors to reduce the amount owed. Whilst this option is good for both sides, it is better for the borrower.
You could go for a debt management plan. This reduces how many payments you make every month and will reduce the interest you pay. A debt management plan is intended to reduce your unsecured debt.
If you choose this option you pay a monthly amount to a credit counselling company which then pays the debts in line with a payment schedule.
A more serious solution is bankruptcy. This is for more serious debt and for situations where there seems no other viable way of solving the debt problem.
Bankruptcy is very effective at clearing your debt but will affect your credit in the future. Get professional advice before making the decision to go bankrupt.
Preparing Ahead for College Tuition or Homebuying
If you’re young right now, you may not spend much time thinking about the kinds of things you’ll have to pay for eventually. While purchases like houses and payments such as college tuition for any kids you have seem like far off expenses, both of these things will be much easier to handle if you plan ahead now.
Hospital Bills Stressing You Out?
When President Obama decided it was important to focus on healthcare reform, he created a bill that allows you to get better health insurance in some regards. You can now get free checkups, free shots, and anything else free that might be considered preventative care. However, anything else became way more expensive than it used to be. Even a small trip to the emergency room for a broken arm will cost you more than you ever had to pay in the past. With high deductible plans being normal, it could cost you thousands of dollars to go to the hospital, whether it is to have a baby or to get stiches. And with no help from insurance to get those bills paid off, the stress may be unbearable. Fortunately, there is help available if you need help with hospital bills.
