A Guide
to Getting out of Debt
Debt Help is the stepping stone to debt
elimination and financial recovery. Debt help analysis guides you to
save thousands of dollars in interest charges. Consolidation of your
credit card debts and other unsecured bills will allow you to get out
of debt as quickly as possible, save money on interest and late fees,
stop creditor harassment, save your good credit rating or begin
immediately to repair bad credit or negatives on your credit report.
In a recent survey it was reported that almost 58% clients vouched for
Debt Management Plan as the best way to settle their debts. Another
42% client had filed bankruptcy since dropping off a Debt Management
Plan or DMP.
Debt Management plans can reduce your monthly payments, interest
charges, penalties and some times even the repayment period. Even if
bankruptcy seems like your only solution, it may not be the right debt
help solution and may cost you for many years to come. The loss of a
job, divorce, credit card spending and family medical emergencies
among other life style matters can cause negative money issues.
Statistics released by the administrative office of U.S. Courts show
that a total of 388,864 new non-business bankruptcy filing in the
United States during the quarter, ended on September 30, 2004. This
included 274,196 chapter 7 filings and 114,454 chapter 13 filings.
Most economists consider a ratio of unsecured debt to annual income of
40-50% percent or more, as being a strong indicator to bankruptcy.
This is taken as a ‘˜thumb rule’ in most of the cases. So in order to
protect himself from such crisis one should keep his unsecured debt to
annual income ratio lower than 40 to 50%. For example if someone has
an annual income of $5000, he should keep his annual debt minimum
$2000 to $2500 in order to avoid his bankruptcy.
36% or less: This is a healthy debt load to carry for most people.
37%-42%: Not bad, but starts to restructure your debt now before you
get into real trouble.
43%-49%: Financial difficulties are likely to occur unless you take
immediate action.
50% or more: Get professional help from debt counselor to aggressively
reduce debt.
You should also control from having a large amount of unpaid
outstanding credit or using more than 80% of your available credit
(which causes a high debt to income ratio).
It is better to have a debt free life without having a savings rather
than maintaining debts along with savings. The reason is simple. As
the return on short term investment i.e. savings is lower than the
interest payable on accumulated debt, it is always advisable to pay
the debt first rather than go for the short term investment. Because a
repayment of single debt instantaneously may save a lot of money in
future. In other word, One dollar payment is better than one dollar
saving.
From the Consumer Debt so published by Federal Reserve Statistical
Release, it is found that each and every year total consumer debt
(both revolving and non-revolving) has an increasing trend. In 2000
and 2001, total consumer debt has a rising trend by 11.42% and 8.04%
with respect to the year 1999.
However, in 2002 and 2003, total consumer debt increased to 4.45% and
4.52% respectively, at a decreasing rate with respect to just previous
year’s total consumer debt. As there is no specific trend in total
consumer debt we may conclude that in 2005 also, the total consumer
debt will have an increasing trend of 4.49% which signifies that at
the end of 2005 total consumer debt will reach about $2109.85 Billion.
For better insight in this topic please view:
http://www.debtconsolidationcare.com/getoutofdebt.html
http://www.debtconsolidationcare.com/debt-solution.html
http://www.debtconsolidationcare.com/debt-free.html
http://www.debtconsolidationcare.com/help.html
About the Author:
Janet Williams is a contributing
Writer to
http://www.debtconsolidationcare.com/
And is currently working on a special section in the site called do it
yourself where you can eliminate your debts and become debt free. |
