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Dealing with Debt

Dealing with Debt

 

                Americans love spending money – so much so that the majority of Americans now spend more than they earn.  New research from FINRA (Financial Industry Regulatory Authority) showed that Americans’ satisfaction with their personal finances has nearly doubled from 16% in 2009 to 31% in 2015. Unfortunately, the percent who are spending less than their income, and therefore have money to save, has not seen the same improvement.

                The same report found that 60% of Americans spend about equal to their income (38%) or who spend more than their income (18%). These numbers have stayed relatively consistent since 2009, staying within two to three percentage points of those reported above.

                  The majority of consumer borrowing, about 63%, is represented by non-revolving debt such as car loans. But revolving credit, which includes credit cards, is taking a larger and larger share of the total. 

                How do you know when your debt total is out of hand?  Inability to pay current bills or being consistently late in paying bills are two common red flags.

                What can you do to get out from under credit card debt?  First, stop using credit cards.  Stop carrying the cards with you on a daily basis and start using cash for purchases.  Next contact your creditors to delay or reduce payments.  Set up a realistic payment plan – determine how much you can afford to pay each month and then follow the plan.

                What about debt consolidation services?  Debt consolidation loans, at least reputable ones with affordable interest rates, are hard to find. Many companies that advertise debt consolidation are really offering very high-cost loans or even just trying to sell expensive information packages with common sense tips on reducing debt.

                Is credit counseling a good choice?  Credit counseling organizations work with people who are in debt or having money troubles to set up budges and bill-paying plans. They can be an excellent choice for reviewing your entire financial picture. The counsel can contact your lenders to work out a plan for you to repay your bills. There may be a small fee for this service.  Be aware of credit counseling services that offer quick solutions for a percentage fee based on your total debt

                Research by “American Saves”, a national campaign that promotes savings, shows that those with a plan are nearly two times as likely to spend less than they earn and save the difference than those without a plan. The idea of putting together a financial plan may seem daunting and cause anxiety and stress. But the act of discovering where your money is going each month and creating a plan, that includes money to save, can provide create feelings of pride and excitement.

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