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Trout Associates Guide for What to Do When Overcome by Debt

Trout Associates Financial Plan
Trout Associates Financial Plan

Many people today are in debt over their heads. There are many reasons for this. One is that the economy post-recession is not as rosy as the media would have you think.

American Economy Not “Rosy” –

As reported in the Guardian, according to the International Monetary Fund, the economic “growth” that has occurred in the past 10 years has not helped the majority of Americans. In fact, poverty is on the rise, along with higher rates of suicide and drug overdoses. The wealth of the lower 40 percent of the population has not increased since 1983.

Predatory Lending –

Another reason for higher debt levels is that lending policies over the past 20 years have gotten increasingly predatory. According to CNBC, the average credit card rate is now 16.9 percent. At those rates, it is very difficult to get out of debt once you are in.

Car Prices and Higher Auto Loan Rates –

Finally, car prices have soared in the past few years. CNBC is reporting that the average new car price is $33,000. On top of that, they are also reporting the average rate of a new automobile loan has jumped in one short year from 4.9 percent to 6.19 percent. It was sadly not too surprising in February when the Washington Post reported that 7 million of us are three months in arrears in our car payments.

If people are so far behind in their car payments, which is a necessity in most areas of the United States, then we must make the next logical conclusion that many people are over their heads in debt.

If you are in heavy debt, it is clear that there are many aspects of the system that are so rigged that you are likely more a victim than someone who made mistakes.

The next question is, “What now?”

Don’t Wait –

Being in debt is really frightening, and we may feel incredibly guilty. This can lead to inaction. That is a huge mistake because debt snowballs, especially at the current interest rates on many consumer loans and credit products.

Examine All Expenses and Loans –

In order to make sense of your unique financial situation, you need to begin tracking all of your expenses – the loans, the monthly expenses – like rent or mortgage, utilities and insurance – and those that happen yearly. You need to get a ballpark figure of your automobile expenses, such as registration, maintenance, gasoline and repairs. What is the average of your food bill? What unnecessary expenses do you have each month? For those loans, Discover suggests you explore what the interest rate is for each and how much more you owe. Also, examine if you are behind on some payments.

Prioritize –

Before you reach out to professionals in the debt industry, where can you eliminate unnecessary expenses? Streaming services, Starbucks, eating out, impulse buying online and in stores are places to look to cut costs for now.

How about cutting the cable TV cord? You can get so much entertaining content online for free or really cheap today. Why spend $75 a month or more? Take an axe to any expense you don’t need for now. When you have eliminated these expenses temporarily and significantly reduced your debt, you can decide which of these trivialities you really need, and which ones were just time and money wasters.

With those expenses gone, look at your budget again. Does this help you to make ends meet and pay down debt in a streamlined fashion? If you have high-interest credit card debt, the answer is likely that you will still need to find more solutions.

Seek Debt Relief Help from Trusted Professionals –

The next step is to speak with trusted credit and debt counseling professionals and, if you have high-interest loans, trusted professionals who can help you with debt consolidation loans, like Trout Associates. The debt counselors may be able to arrange lower interest payment from creditors. Trout Associates can get their clients debt consolidation loans where they are making one payment at a lower interest rate.

The idea behind working with debt counselors or seeking debt consolidation loans, such as those offered at Trout Associates, is that you will not be carrying the burden of high interest rates as you try to quickly pay down these loans.

Earn More Money –

If you are swimming in debt and have to plunge into austerity mode, it is nice to have a means of emerging on the other side a bit quicker. Is there any way you can earn a bit of extra money each month, such as by working part time or freelancing or by selling some unneeded items? Nerdwallet has a list of side jobs that might help.

Craigslist and eBay are great places to get some quick cash from unloading some nice things you aren’t using any more. Did kayaking end up being too much of a hassle, loading and unloading the boat? Did you upgrade your cell phone and not sell the old one? Do you have some used textbooks to sell? Now is the time to find those unused items and use them to pay down some debt.

Debt Consolidation –

Trusted debt consolidation companies, such as Trout Associates, provide their customers with a personal loan at a lower interest rate than their credit cards, and only require one monthly payment. At the lower interest rates, you will be able to actually pay off debts quickly and responsibly while improving your credit score. Otherwise, you will likely never quite pay those predatory credit cards off. That is how they were designed.

Lifehacker advises that the other way to consolidate debts, if you don’t owe as much on credit cards, is with a balance transfer to a credit card that has a zero interest rate for the first 12 to 18 months. This program only works if your debt can be either fully paid or significantly reduced during the term that the rate is at zero interest. During the zero interest rate term, you will be able to just pay down the principle every month rather than fighting uphill against interest charges, so you will pay down the debt more quickly.

Debt Avalanche –

If you are one of the lucky people who have only lower interest credit card debt, you can use the debt avalanche method. Forbes explains you pick the card with the highest rate. Pay the bare minimum on all of the other cards but put more each month towards the one with the higher rate. Once that card is paid off, rinse and repeat with the card with the next highest rate. Each time one card is paid off, you will have more on hand to pay off the next card.

Debt Counseling and Settlement –

It is possible to use the services of a debt counselor or do your own debt settlement. A trusted debt counselor (and not all are), will help you negotiate with the creditors for lower interest rates. They will have you make one payment to them that is distributed to each creditor. As you can see, the company must be reputable, and their fee must not preclude you from getting your loans paid off quickly. The Balance suggests that you consult the Better Business Bureau or the United States Bankruptcy Trustees for recommended credit counseling agencies, if you choose to go this route.

Bankruptcy –

The nuclear option is bankruptcy. But this will not eliminate all debt. You will still be saddled with any student loan and tax debt. It will also harm your credit score. Sadly, it also costs some money to file a bankruptcy because it is not something advisable for consumers to do on their own. You really need legal help with this one.

Why Are You in Debt? –

Nerdwallet explains it is essential to take stock and understand the “why” of your debt. This is especially true if you are in heavy debt due to impulse spending. One big risk is that you will consolidate your debts but use the extra money to splurge more and just end up in trouble again.

If you are a compulsive spender, Psychology Today suggests you only use cash and take a break before you spend. Credit cards, with their delayed payments, encourage us to spend too much. Walking away and thinking before making a purchase helps us get out of the mode of spending in order to fulfill an emotional need. If you are a compulsive spender, you will need to adopt these techniques to help you break your addiction along with the other suggestions above.

If you are in overwhelming debt, don’t wait. Sit down and figure out your expenses, cut the extras, and pick the best means of reducing higher interest payments, so you can attack the debt and quickly and responsibly bring it down each month. Pick only trusted debt counselors or debt consolidation companies, such as Trout Associates, to help you. Many of us have been through this. You are not alone. There are resources to help you get your debt eliminated.

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Interstate Associates Shares Why People With Credit Card Debt Have to Pay More For Everything

Credit cards can be an invaluable tool for helping you make large purchases or manage a crisis. If not managed carefully, however, they can actually lead you down into a debt spiral from which you may never recover. What many people may not realize is that when you pay for things with credit cards, you actually end up paying more for them than you would if you used cash or a debit card.

WHY DOES CREDIT CARD DEBT MAKE EVERYTHING MORE EXPENSIVE?

A credit card is a tool that you use to access a line of credit, which is essentially a loan. Your credit limit determines how large of a “loan” you can take out and your interest rate determines how much you will pay over time. Because the interest on credit card debt compounds, the longer you take to pay off the loan and the higher your interest rate is, the more you will end up paying. If you pay off your credit cards every month, then you are essentially taking out a loan for less than 30 days which means you will not pay any interest.

On the other hand, if you bought an item that cost $1,000 on a credit card with a 25% interest rate and took a year to pay it off, then by the time it is paid for you will have paid an extra $140 for the item. That may not be so bad if you only buy one item, but many people carry thousands of dollars in credit card debt, which means they are paying significantly more for the same items as someone who pays off their credit cards every month. This is why letting Interstate Associates help you get out of debt is so important.

CREDIT CARD DEBT ALSO AFFECTS YOUR CREDIT SCORE

When you carry a great deal of debt, it also has a negative effect on your credit. This can make it difficult to get low-interest rate loans, which means once again you end up paying more for things. For instance, if a person with good credit buys a $20,000 car, they may qualify for a 4% loan. If they pay off the loan in 60 months, then they will only pay about $2,100 in interest, which brings the total amount they will pay for the car to $22,100.

If a person with poor credit tries to buy the same car, they may have to pay up to 18% interest for the same loan. If they take the same 60 months to pay off the exact same car, they will end up paying almost $10,500 just in interest alone. That means they will pay $30,500 for the exact same car that the person with good credit bought for $22,100.

Having to pay more for things also has a cumulative effect. For instance, the person with good credit will only make about a $370 car payment each month. The person with bad credit will have to pay about $510 per month for the same car. If both individuals make $2,000 a month, then the person with good credit will have an extra $140 to spend every month after they make their car payment on the exact same car. Keep in mind, bad credit also affects the cost of other things, such as insurance, so not only will the person with bad credit pay more for the same car, but they will also have to shell out more money every month for insurance as well.

Getting out of debt can be a long, painful process, but Interstate Associates can help

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finance

How to Budget on a Variable Income According to Graylock Advisors

Graylock Advisors Personal Finance
Graylock Advisors Personal Finance

Budgeting is a process that nearly every adult has to learn to master. The monthly budget is a tradition that people cannot function properly without. However, this process becomes significantly harder when one or more members of a household are operating on a variable income. A variable income may be the result of commission-based jobs or jobs that work on short contracts. No matter the source, individuals can easily have their financial futures derailed by these positions.

The budgeting process

The budgeting process often works by an individual laying out all of their expenses and streams of revenue. They may have an app that helps them or simply use a pen and paper. Then they determine all of their fixed expenses. These expenses, which include rent and car payments, are expenses that are the same every month. Then there are variable expenses such as food or entertainment. An individual first budgets away their fixed expenses and then considers their variable expenses.

They can make a number of executive decisions about their spending and their lifestyle while looking at these variable expenses. Having a variable income makes this process difficult. Budgets work best when they are considered over a period of months or years. Individuals can identify trends and decide if certain regular expenses are well outside of their normal budgetary abilities. A variable income changes this calculation every month and makes these decisions significantly more difficult. Budgets sometimes become so difficult that individuals find themselves in debt and in need of help from those at Graylock Advisors.

Make generous adjustments

The best way to budget on a variable income is to take into account these variations when one is considering what to spend money on. They should look back over a period of months or years and see the full range of an individual’s income. Then, they should ensure that they are spending an amount closer to the lower end of the income scale.

This spending minimizes the chances that an individual will be “caught” by a short period of significantly decreased income. If an individual makes more than they budgeted for, they will simply have more money to spend on their wants and savings, but if they make less, there is the chance that they will miss a payment or have to spend money on credit card fees. Being safe will save an individual a considerable amount of money over time.

Incorporate steady income streams

Sometimes, individuals have such a variable income that they cannot make adequate decisions about their bills. In that case, individuals need to find a way to bring in some sort of reliable revenue. They can do this in a number of different ways. Some investments, such as stocks that pays regular dividends, can bring in a steady income stream over at least a period of several months or years.

An individual may also be able to find a job that only works them a few hours per week. They can count on that extra revenue to make up for their particularly variable income over other periods of time. In addition, an individual can even work within the confines of their variable job if they need to. They can talk to their bosses and managers about projections for future work to help them plan accordingly.

Conclusion

Any individual who has a variable income should start budgeting as soon as possible. They should be conservative with their spending and constantly look for regular revenue streams. They may also need to hire a financial planner or work with a debt consultant like Graylock Advisors if they run into too much trouble with this process. Either way, individuals will only meet success if they are able to stick with their variable income budgeting plans.

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Brice Capital Explains the Various Ways Debt Affects Your Life

Brice Capital on Effects of Debt
Brice Capital on Effects of Debt

If there is one topic that makes many people uncomfortable, it is the topic of debt. Having large amounts of debt that goes unpaid for extended periods of time can have a series of emotional and practical effects in one’s life. Here are some of the ways that living with debt can cause an adverse effect on your life.

Can Prevent You From Purchasing a Home

After graduation, one of the biggest decisions that new graduates have to make is where they plan on living. For many who aspire to save up to purchase a home and make a down payment on a mortgage, having crippling amounts of student loan debt can derail that goal. 

The reason why this is the case is because banks do not want to take on a high-risk candidate to loan money to. If they see that you have a high debt to income ratio, they will instantly turn you down. Those monthly loan payments that you will be making will be seen as competition to mortgages and monthly rent as well. If your debt is higher, your monthly payments will likely be higher as well. All of these factors combine to make you less marketable to future lenders.

It Can Delay Life Goals

Whether it is traveling or starting a family, any major life goal will likely have a hefty price tag attached to it. If you are taking on a lot of debt and are not making enough to pay it off in a reasonable amount of time, major life goals may have to be delayed until later in life. Many are delaying these life goals for the sake of ensuring that they can have their other bills paid.

Depending on how much you owe, some of these goals could be potentially delayed until mid-life. That is why it is imperative to pay as much as you can monthly so that this timeline is drastically reduced. While there are many goals that are noble and honorable, trying to achieve them quicker while having tons of debt can compound issues later in life.

Fortunately, there are experts in the industry of debt consolidation like Brice Capital who may be an option to help in this area. 

Can Cause Mental Health Issues

Unfortunately, debt has also been linked to depression, and unsurprisingly so. Sometimes, with the interest that is tacked onto the actual amount you borrowed, the debt can feel as though it will never end. This can predispose to a litany of mental health issues and can cause one to have a depressed mood constantly. 

Financial stress and physical stress are related, and the longer the debt stays, the longer the depression will linger. In extreme cases, the amount of money that is owed can prove to be too much to bear. 

This can also be compounded by letters in the mail, consistent phone calls by debt collection companies and online messages reminding you of how much you owe. 

Wage Garnishment

While it can be deemed cruel, certain creditors may move to sue you and have an order to garnish your wages so that they get their money back quicker. In simple terms, a judge gives whoever employs you an order to make a payment directly out of your paycheck to whomever you owe the money to. 

The worst part is that this is a simultaneous order. You can work, but you will never even see the funds because they are instantly taken out of your pay. You do not even have the pleasure of at least seeing the money being directly deposited into your bank account. Usually, this is done in cases where your monthly payments are very low or if you owe a substantial amount and have not demonstrated an adequate attempt of paying it back. Despite this, there are industry experts in debt consolidation like Brice Capital which can assist with debt-related troubles.

Bankruptcy

While this is usually a desperate last resort, thousands of people unfortunately have to file for bankruptcy to gain protection from their debts. Filing for bankruptcy can have a crippling effect on one’s credit score and the ability to gain the necessary financing that may be needed in the future for purchases such as a vehicle or a home.

While bankruptcy can prove to be helpful in certain situations to get relief from debt, it can also be a long, drawn-out process that can have far reaching consequences. 

As you can see, debt can affect one in a variety of ways. While these problems won’t be nearly as severe if you are responsible with monthly payments, it is advised to never borrow more than what you can afford. These problems can stay with you for a lifetime.

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finance

Barron Advisors’ Tips for How to Repay Debt on a Fixed Budget

Barron Advisors Saving
Barron Advisors Saving

Many of us face a difficult challenge in that we want to repay our debt, but we lack the resources to do it. In many cases, we only think we don’t have the ability to repay our debts because we live on a fixed budget with little room for leeway. Whether you realize it or not, there are ways to pay off your debts gradually over time.

Eliminate Unnecessary Expenses

If you do live on a fixed budget, you will have to find ways to improve your income versus spending ratio. You obviously can’t stop paying on your debts, so that means you will have to identify other ways to cut spending. It may help to start a journal in which you record every purchase you make, whether it’s for a morning latte or to pay on an online subscription service. Cutting these expenses may be easier than you think, if you look for cheaper alternatives. For instance, buy bulk instant coffee or cancel your cable service in exchange for keeping your online streaming services.

Consolidate Your Debt

If you owe multiple creditors, you’re probably paying far too much in interest and this is preventing you from making a dent in your principal balances. Barron Advisors, or another debt consolidation service, can help you by packing everything you owe into one easy monthly payment. This means you’ll get rid of those high interest charges that are keeping you from paying off your debt. You’ll have that extra money each month, which can be used to make additional payments, helping you to pay off your debt even faster.

Use the Snowball Method

Another way to pay off your debt is to use the snowball method, which involves paying off your creditors according to the size of each debt. Begin with the smallest debt, paying more than the monthly balance on that account until the debt has been repaid. During this time, you must also continue paying the minimum monthly payments on your other debts. Move to the next smallest debt and repeat the process. Each time you pay off a debt, take the money that would have gone to make that monthly payment and use it to pay off the next smallest debt. As you follow this method, you’ll find it will be easier to pay off the larger debts.

Tackle the Highest Interest Rates

If the debt consolidation loan you get from a service like Barron Advisors isn’t enough to consolidate everything, you may need an alternative method for paying off your remaining creditors. If your debts are of similar sizes, it may be beneficial to tackle the creditor with the highest interest rates, so your payments will have a bigger impact on your future interest payments. Similar to the snowball method, continue paying the minimum required payments on each of your other debts, as you tackle one high-interest creditor at a time.

Get Rid of Your Credit Cards

Every creditor will recommend that you keep their card to help you cover emergencies. They will tell you this, because they know you’ll be tempted to use their cards once the balance has been paid off. Instead, stash away your credit cards in a safe place where you can use them once every 6 months or so for a small purchase just to keep your account active. This will boost your credit while removing the temptation to get further into debt.

Always keep one credit card with the best terms on hand. Forget about it unless a financial emergency strikes.

Stop Spending Your Windfalls

From time to time, you might receive a bonus or a raise at work. Alternatively, you might win a few bucks on the lottery or receive a cash gift for your birthday and on holidays. While it may be tempting to splurge on something nice for yourself, you’ll be doing more for yourself by using that money to pay off your debts. Just think about how much easier your life will be without those monthly payments. Putting all of the extra income you make into your debt repayment plan will help you reach a debt-free status that much sooner.

Start a Savings Account

As you use these tips to chip away at the debts you must repay, your income versus debt ratio will improve. In order to keep a better balance of that ratio, you will have to prepare for future financial emergencies. You’ll also have to find alternatives to using credit for the things you want. You now have all of this money that you’re no longer paying out to creditors. Instead of thinking of that money as expendable, put it away in a high-interest savings account. This will help prepare you for future financial needs, so you won’t have to rely on credit cards and loans.


While you won’t be able to repay your debts in one fell swoop, making small efforts consistently over a longer period of time will help you become debt free. Even taking small steps will help you reduce what you owe, while also helping you bolster your credit score. Before you know it, you’ll be completely debt free and able to move forward with your dreams.

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finance

Programs Available for Those Who Want to Purchase a House but Have a Low Income

Affordable housing are housing units targeted at low income households in cities, suburbs and rural areas. According to ABT Associates, these types of housing are often presented as either owner occupier or rental tenure. In spite of many well-meaning objectives, the efforts to realize affordable housing continue to be bog government agencies and private mortgage providers. On the government’s side, evidence points to experimentation of various support programs like provision of down payment grants, subsidies on interest rates and tax incentives for lending institutions. Borrowers looking to benefit from affordable housing initiatives are also caught between two dimensions of affordability; the ability to offer stipulated down payment and service the already signed out loans or the payment burden. On the whole, the challenge of providing affordable housing is aggravated by the inability of housing providers to match supply with demand.

The role of government and key stakeholders


The federal government has an important role in ensuring the dream of affordable housing comes to fruition without any delay. In the mid 90’s, the government mostly concentrated on supporting project based assisted private housing, tenant based assisted housing, construction of public housing. The tenant based rental assistance was essentially a tax credit program designed to harness equity capital for individuals and families living in low income housing. 

According to a smart neighborhood improvement and advocacy group Smart Growth America, the federal financing of real estate ventures continues to impact the lives of millions of people living in America today. Indeed, the government spending on real estate programs now amounts to $450 billion annually. The relief is largely in the form of tax, loan and direct expenditures. Between 2007 and 2017, the government committed $2.2 trillion on various real estate programs.

The assistance was distributed to various communities through direct grants and credit subsidies, tax expenditures and loan guarantees. The largest beneficiaries of direct grant programs are project based rental assistance and tenant based rental assistance. These figures do not include the trillions of dollars spent in loans and loan guarantees by entities like Fannie Mae. To ensure sustained success, the government and industry stakeholders also need to: 


• Provide safety nets to support depressed families
• Support balanced housing choices in rural areas, cities and suburbs
• Make aggressive efforts to reinvestment in existing communities and neighborhoods
• Help grow the middle class in order to uplift the housing market

What Chenoa Fund is doing ease the housing burden


The Utah based Chenoa fund strongly believes that access to affordable housing is a right every American should enjoy. Over the years, the fund has given many creditworthy families the right tools to acquire homes. This has in turn increased the number of families living in affordable housing and created healthy communities that are proud of home ownership and other favorable housing arrangements. Chenoa attributes its success to the spirited cohesion it has built between home buyers, lenders, realtors and developers all across the US.

The federally chartered government agency, CBC Mortgage Agency (CBCMA) supports Chenoa Fund in its long drawn mission to increase affordable and sustainable homeownership to a vast segment of the deprived population. The specialty, mortgage finance agency offers appropriate secondary mortgage products to creditworthy individuals with little or no down payments to purchase a home. Families looking for home buyer support or simply want to speak to the program development team members can get in touch with the two funds via email and phone contact.

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finance

How Lenders Evaluate Applicants According to August Funding

August Funding Bank
August Funding Lender Evaluation

Credit evaluation is a drawn-out process that analyzes the ability of an individual or business to obtain loan approval. According in Inc, the lender’s ability to grant credit is heavily dependent on the creditworthiness of the borrower and confidence bestowed on them to repay the money. Creditworthiness is essentially a history of trustworthiness and financial soundness. The lender will also consider aspects like the size of the burden, loan size, commitment period, frequency of borrowing and responsibilities of the loan. When analyzing the size of the burden, the lender is often keen to establish the borrower’s earning power and ability to repay the loan. 

The borrower’s earning power should ideally exceed the demands of the scheduled payment. The duration of commitment is another important consideration in the loan approval process. To cover the risks associated with long-term loans, lenders often charge higher interest rates. A customer with a high frequency of borrowing and repaying can use the opportunity to build a solid reputation with the lender. A good reputation is critical in attracting favorable loan terms. With regards to responsibilities, most lenders tend to support causes that bring greater good to the host communities. One of the communal ventures that may attract the interest of lenders is a plan to construct low cost housing to improve the standard of living of area’s residents. 

Evaluating loan applicants

The credit risks that lenders look for when analyzing a borrower’s ability to repay a loan include an analysis of the borrower’s financial situation, income and credit or repayment history. According to integrated financial services firm Wells Fargo & Company, these core elements can be narrowed down to 5C’s, namely:


1. Credit history – when analyzing credit history, the lender will delve deep into your credit history to know the lenders who have given you money; the type of credits you have taken before and your record of repayment. Your credit score will also be analyzed to ascertain the risk levels.

2. Collateral – a request to provide collateral normally applies to security backed loans. In most cases, the lender will request collateral to cover home equity or car loan. Before any collateral is accepted, the assessors will subject the asset to a thorough scrutiny to determine its market value. Non-collateralized assets may also be included in the assessment.

3. Capital –capital evaluation takes into consideration the borrower’s primary income, investments portfolio, savings and other underlying assets that may be used to cover the loan. In case the borrower loses a job or is unable to repay the loan as agreed, amends can be made using the capital.

4. Conditions – the lender will scrutinize your plan or the purpose for getting the loan. You can always find out the areas the lender is more willing to support to reap favorable terms.

5. Capacity – this is a broader determination to establish if you are comfortable repaying the loan using the listed resources. The assessment takes into consideration; amount and type of income, employment history and the overall the financial stability of the borrower. 

Overall, lenders are more willing to give money to borrower’s whose net earnings surpass the debt obligations and any expected contingencies. Special financial tools have been developed to help lenders assess credit risks and ensure the business stays on the track.

Need Financing: Choose an Ideal lender!

The ability of financial institutions to furnish loan also depends on their strength. The health of these institutions is usually determined by such factors as liquidity, profitability, quality of assets and capital sufficiency. Profitability is the capacity of a financial institution to generate sufficient revenues and stay profitable. Capital sufficiency or adequacy, on the other hand, is the financier’s level of capitalization and ability to withstand stress. A financial institution with good liquidity should be in a position to fund its short-term financial commitments. Asset quality is a broader term that is used in banking to refer to customer portfolio and analysis of bad loans. 

August Funding is an example of a solid, fast rising financial institution. The company understands the importance of credit in advancing the course of business and providing for one’s family. This is the reason it supports long term investment plans and short-term business needs to boost liquidity. The company’s loan approval procedure follows Acts proffered by the Federal Trade Commission such as the Equal Opportunity Act and Fair Credit Reporting Act. The team is supported by friendly customer support.

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Tips from Truman Advisors on How to Tell If You Have Too Much Debt

Truman Advisors debt
Truman Advisors debt

There isn’t anything wrong with having debt if it can help you reach your personal or professional goals. For instance, taking out student loans may be the only way to pursue an advanced degree in your chosen field. However, it is important that you are able to keep your debt to a reasonable level. How can you tell if you have too much debt?

What Is Your Debt-to-Income Ratio?

Your debt-to-income ratio (DTI) should be no more than 28 percent before factoring in a rent or mortgage payment. Ideally, it will be no more than 36 percent after accounting for a housing payment. This gives you the ability to create an emergency fund, save for retirement and otherwise have the financial flexibility needed to live comfortably. While you aren’t necessarily doomed if your DTI is higher than 36 percent, it may be a good idea to review your budget to see if you can make any adjustments. Talking to a company such as Truman Advisors may also help you get closer to an ideal debt level.

Are You Only Making Minimum Payments?

If you can’t afford to make more than the minimum payment on a credit card or other revolving account, it may be a sign that you have too much debt. You should strive to pay off your credit cards and similar accounts in full each month. At a minimum, you should make it a goal to make double the minimum payment before a billing cycle closes. That will help you avoid paying interest that could go toward your retirement or toward discretionary purchases. 

Do You Go into Debt to Pay Your Debt?

It is not uncommon for people to use a credit card to make a credit card payment. While this will ensure that your credit score and history remain intact, it will do nothing to help you get out of debt. If you find yourself taking on new debt to pay off your current balances, it may be a good idea to speak with a financial professional such as those from Truman Advisors. A financial professional can provide insight into how debt consolidation or debt forgiveness programs can help you pay down balances faster. 

Have You Thought About Filing for Bankruptcy?

A sure sign that you have too much debt is that you have found yourself looking into filing for bankruptcy. While bankruptcy can actually be a positive event for some people, it also has the potential to ruin your credit score. Furthermore, a bankruptcy can stay on your credit report for up to a decade if you file for a Chapter 7 liquidation bankruptcy. Other potential negative consequences of filing for bankruptcy include not being able to get a credit card or apply for a home loan for two or more years. 

There are many ways in which having too much debt can impact the quality of your life. For instance, you may not be able to quit a job because you need the money to make minimum payments on a credit card or medical debt. This could lead to a significant amount of stress that may cause mental and physical health issues. Therefore, it is in your best interest to figure out a way to get out of debt in a timely manner. 

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Roseland Associates Share the Warning Signs of Mounting Debt

Roseland Associates Interest Rates
Roseland Associates Interest Rates

No one likes mentioning the dreaded “d” word. There is no clearer sign that you are struggling financially than being in debt. Whether it is owing money to someone else or the government, mounting debt that is left unpaid can have a drastic effect on one’s credit score. This is why it is imperative to understand the early signs of being in debt, to begin with. It is always easy to lose track of our spending on credit cards or other irresponsible financial habits until we see how much we owe. Here are some warning signs to be wary of.

Consistently Making Minimum Payments

Making the required minimum payments each month is not an inherently bad practice, especially if you are able to make these payments on time. However, no matter how much you owe on a particular debt, if you find yourself only making the required minimum payment, you will spend much more time paying off that debt and pay a larger total when all is said and done. This can be especially the case with larger debts such as student loans. Many people think that only making the minimum payment will make their lives easier, but this often is just a stalling tactic.

If you owe a large sum of debt, it would behoove you to pay as much as possible every month, because, with each minimum payment, you extend the loan’s shelf life as the interest continues to accumulate. Organize your finances and put yourself in a position where you can increase the sum of the monthly payments you are making. Expert advice and consultation can be sought through resources such as those offered by the debt consolidation experts at Roseland Associates. 

Consistently Making Large Monthly Payments

Of course, while you do not want to make the smallest payment possible per month for the sake of paying your debt off quicker, you also do not want to be too aggressive with your payments either. The general rule of thumb is that you should not make monthly payments that comprise 20% or more of your monthly income. If you find yourself paying more than this, you may not have enough income to cover other necessities such as utilities, food, housing, and transportation. It is absolutely critical that you pay down any balances at a rate where you still have enough to take care of yourself. This is even worse if 20% of your income is only the minimum payment for your debt.

Getting a Cash Advance

Getting a cash advance is perhaps the worst way to obtain a credit card. This is because the money is typically loaned to you at the worst terms possible, and the one-time charges tend to be very high. Unless you have a genuine emergency in which you need an advance quickly, avoid this at all costs. If you have taken a cash advance for the sake of paying down your debt, the repayment of the advance should be a priority because the advance has much more daunting interest rates. You can learn more about balancing interest rates and rates can be expect by contacting Roseland Associates. While they do not offer a cash advance, they deal with various forms of debt on a daily basis.

Your Debt Impacts Your Personal Life

If you find that your debt is impacting your friendships and relationships with others, this can also be a sign that you are carrying too much debt. When debt remains unpaid, it can result in a litany of complications that can impact your interpersonal relationships. This is especially the case if it can affect your means to provide for a family if you have one. If you have not created a budget that incorporates every possible charge, you fall behind fast and your debt will not leave you. 

Your Payments Get Declined

There is nothing more embarrassing than going to the register and needing to take out multiple cards because each card is declining. This is an easy tell-tale sign that you owe too much money. If you have a credit card that is either maxed out or near its limit, you are carrying too large a debt. Refrain from using credit cards for purchases until your existing balance has been paid off to manageable levels. If you believe that your debt is out of hand, then there is likely an issue that you have to address. Learn better financial habits and spend the money on your credit card responsibly. 

As you can see, paying off debt is a serious responsibility that will require financial diligence on your part so that it does not come back to haunt you. Be cognizant of these warning signs so that you can put yourself in the best possible position to pay your debt off in full.

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How to Choose a Strategy for Saving According to Mountain Ridge Associates

Mountain Ridge Associates
Mountain Ridge Associates

Millions of Americans wish they were saving more money. They have a number of vacations and large purchases that they want to pay for but simply cannot afford. These individuals will only begin to save more money when they have a plan and a strategy for savings. Determining an effective strategy and implementing that strategy are essential for reaching a wide variety of savings goals.


Determine your budget

There are a number of different strategies for saving. Practically all of them depend on balancing the money coming into a household and the money going out. Individuals should determine how much money they have to pay in expenses and debt every year. They need to plan a budget and then plan how much money they should be able to save every month.

Then, they should determine how they want to save money and how quickly they want to save it. Different saving strategies involve taking money at different times and in different ways. Some families have a savings strategy where they request large amounts of withdrawals from their paycheck every month. Individuals then receive a considerable tax refund once they file their taxes that they can use to pay for large purchases or vacations. There are apps that force savings by taking out a certain amount of money per month or always sending change from purchases to a saving account. These tactics are used in addition to simple regular withdrawals. Companies like Mountain Ridge Associates can help individuals determine which of these approaches best fits their needs. 


Set your goals

Savings strategies also revolve around setting goals and having a plan to attain those goals. Many individuals find it hard to simply save because they are told to or are supposed to. These individuals need a reason to save and something to save towards. They can then think about this goal whenever they are foregoing something they want in order to save money. Individuals should be reasonable with their goals and should, with the help of a partner like Mountain Ridge Associates, set them in the short-term and the medium-term. Only setting long-term goals is detrimental to any savings plan. Individuals have to wait so long to obtain the fruits of their savings that they will often become discouraged and disillusioned before accomplishing their goals.


Keep expenses low

Any strategy for saving will be augmented if an individual has a considerable amount of money to save. In order to optimize a savings plan, individuals need to do as much as possible to reduce expenses and increase income. They should consider extra jobs and side hustles that bring in a modest amount of income. Individuals should also consider selling underwater assets or embracing repayment plans and laddering to efficiently pay off their debts. All of these efforts will add flexibility and a cushion to any sort of savings strategy. This flexibility makes it easier for a savings plan to survive any sort of financial crisis that a family may face.


Conclusion

People who have a plan for saving will have a much better chance of meeting savings goals. They will feel more financially secure and will be better positioned to handle life’s large purchases and expenses. In addition, they will have a basis for eventual retirement savings. A few hours of planning and research can mean the difference between success or failure for any saving strategy.