Getting out of debt is the third most popular goal people select when they pledge to save at https://americasaves.org. The America Saves campaign, managed by the nonprofit Consumer Federation of America, is working to help educate and motivate people to decrease personal debt and increase personal savings as a means to increased financial stability.
Are you carrying too much debt?
A recent survey showed that 45 percent of U.S. families with annual incomes under $50,000 rely on credit cards to pay for basic needs such as rent, utilities, insurance and food.
You may have too much debt if:
- You worry about being able to make the minimum monthly payments on your debts
- You are putting off paying some bills each month because you do not have enough money to pay all the bills that are due
- You have to use your credit card to pay for necessities such as food and gas because there isn’t enough left after paying the bills
- You get a cash advance from one credit card to make a payment on another card
- You avoid answering the phone because you fear it is a bill collector
Another way to determine if you have too much debt is to calculate your debt-to-income ratio–the financial benchmark many experts use to help people decide how much debt is too much.
- It is recommended that your debt-to-income ratio be 15 % or lower. When debt-to-income ratios exceed 20 %, problems with repayment increase dramatically. If your debt-to-income ratio is 20% or greater, seeking help from a trained consumer credit counselor may be needed. For more information on calculating and reducing debt-to-income ration, use Colorado State University Extension’s Calculate Your Debt-to-Income Ratio fact sheet.
Additionally, PowerPay is a free, online financial assistance program developed by Utah State University Extension that provides the tools to develop a personalized, self-directed debt elimination plan.
Discover how quickly you can become debt free and how much you can save in interest costs by following a debt reduction plan. Get started today working out a plan to get out of debt and become more financially secure.
Information that I know that I need and I will also be sharing with friends and family. Thanks for this post and article! So helpful..
Thanks for the great article. How do you pick an honest credit counselor? I have heard of some dishonest people in this business that have made the situation worse for some.
Good question, Sheila. There are a couple good resources for you to consider. The Consumer Credit Counseling is a non-profit organization that provides excellent services — at no or reduced costs. https://www.credit.org/cccs/ A second resource would be the National Foundation for Credit Counseling which serves as a professional membership organization that works to provide accreditation and standards of excellence. You can find a list of association members on their website at https://www.nfcc.org/. Hope this helps!