How Much Debt is Too Much?

You have too much debt if you are beginning to struggle to pay it each month, if you have late or missed payments, or if creditors are already calling because of missed payments. You are looking at the prospect of never being free of debt and charging more each month because current payments leave you no cash for emergencies. At this point, life is drudgery, and you are stressed and depressed. There seems to be a snake poised and ready to strike if one more bill hits. Stay away from the financial serpent by taking proactive steps now.

You Have Options and Solutions

Depending on your individual situation, there are many methods of reducing and eliminating debt, and you find your solution among the following:

1. Determine if you have excess cash each month by recording all of your expenditures for one month. How much have you spent on fast food, going out to restaurants, morning bagels and lattes, lunch out at work, impulse buying as you walk through stores? Many people are surprised how much they actually spend on such items. By eliminating them, could you make a double payment on just one credit card? If so, begin now on the one with the least total balance. Make a game of getting this one card paid off. Once eliminated, take all that you were paying on it and add it to the minimum payment on the next. Double payments on a card reduce debt quickly because so much more of that payment goes directly to reduction of principle. Cut up your credit cards in the process.
2. Consolidate your debt by securing one large loan to pay it all off. You now have one lower payment and can begin to money away in savings for those pesky emergencies that always seem to crop up. Cut up your cards, by the way.
3. Consider debt settlement. This involves contacting each creditor after you are 60+ days late on payments and securing lower payments, interest rates, and, often a lower total debt amount. You can do this yourself if you are assertive, a good negotiator, and have plenty of time to spend in the process. If not, employ the services of a reputable settlement attorney or professional to do this work for you. There will be fees involved, and they are usually added to the lower monthly payment you make. Have you cut up those cards?
4. If you have equity in a home and your credit rating is still good, you may be able to get an equity loan or a complete re-finance, taking out the cash to pay off those high interest cards. Interest rates on these loans are lower.
5. Bankruptcy: There are two types of bankruptcy, and they involve either settling your total debt for a greatly reduced amount and paying off the new amount over a period of 3-5 years (Chapter 13) or eliminating your debt entirely (Chapter 7). Consult an attorney for these options, and remember that your credit will be affected for a lengthy period of time.

Whichever option fits your circumstances, you can reduce or eliminate your debt. You owe it to your peace of mind and to your future to take action now.