Help to get out of debt

[JanetWilliams]

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.

[jmjj215]

Debt Help is the stepping stone to debt elimination and financial recovery.

Changing your spending habits so you spend less than you earn is much more of a stepping stone than simply shifting debt around.

In a recent survey it was reported that almost 58% clients vouched for Debt Management Plan as the best way to settle their debts.

Debt management plans ruin your chances for getting a house. It looks the same on your credit report as filing a chapter 13. I wouldn't do them - ever.

The loss of a job, divorce, credit card spending and family medical emergencies among other life style matters can cause negative money issues.

If people had an emergency fund of 3-6 months' expenses, these "negative money issues" would be vastly reduced.

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.

Zero percent unsecured debt will bring one even further from bankruptcy. Imagine that!

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.

0% is healthiest. Stating it this way makes it sound as if carrying a balance on a CC or having personal loans or other unsecured debt is financially smart. It's financially stupid to carry high-interest debt.

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.

This I agree with. But you do NOT need debt consolidation or a debt management company to get you the "debt free life". You need to change your spending habits and spend less than you earn. Live on a budget. Save for a rainy day.

Thanks for the advertisement.

[jeffrey]

Ah, I love it when members take people spamming the forums to task - couldn't just delete this one - just took out all the links. Way to go Jesse

[mjrube94]

Jesse, you rock! I get such a kick reading your posts...

[Snoopy2645]

I believe one can do debt management on thier own thats what I did. I took all cc's & transfered to 0% & then I changed our spending habbits 110%. And then I took on a pt job I got rid of tons of extras. I got a nicer car which costs much less to drive because it takes alot less gas & has had nothing go wrong with it ever. I also quit buying anything except for food everything else must be free or very very close to it before I will buy it. And now before I turn 30 I will have a house that is paid for & btw we also have 3 kids & dh will graduate from college this year. So things are looking very very up for us & we never ever even considered a "program" to help us out.

[mom-from-missouri]

Boils down to will power and self control. You either have it, or you don't. Of course, life does sometimes through us curves to throw us off, but it irks me to see people complaining they can't get ahead when the waste money smoking, going to movies 2 times a week, drinking pepsi out of the machine at work 4-5 times a day, driving a new car every year, new clothes all the time, picture cell phones for every member of the family-whats an 8 year old need one for? what every happened to playing with walkie talkies???

[jmjj215]

then I changed our spending habbits 110%

Snoopy is walking proof that you can (and should) do it on your own. Way to go Snoopy!

Mom-from-missouri, here here. I totally agree. Usually these people need a financial reality check. Maybe the new bankruptcy law, purchased by the cc companies, will do this?

[Tree0164]

Jessie
I am not too familar wiht the new bankruptcy laws only know that they are now stricter. People need to be responsible for their debt. Too many folks charging a ton and then using the easy way out.

Changing habits, getting down and dirty on doing a financial makeover is absolutely essential to getting out of debt.

Snoppy You are doing it! We played the CC balance transfer game as well. We had 3 cc that we did this on and got them all paid off last July! What a feeling to have no more credit card debt.


Mom Self control is key. People want so many give me give me and then charge it. Before they know it they have a 10k on credit card. Have to have an attitude change and live below your means for awhile to get out of debt.

[jhd815]

Here here! to all of the replies posted here.

Doing debt management/debt reduction yourself is so much more rewarding than having someone else do it/arrange it for you. The only debt management/debt reduction resource I would ever recommend is Consumer Credit Counseling Services 800-388-2227 and only for those who simply cannot get their personal finances in order by themselves.