A little more debt won’t hurt, will it? That’s how it begins. You make small purchases on your credit card, and before you know it, you are tens of thousands of dollars in debt.
Debt has long been a problem for most Americans, but the unprecedented difficulties of the past few years – COVID-19, spiraling gas prices, soaring inflation – have spread misery to many more.
If you’re one of the millions of Americans struggling to repay high-interest debt, seeking debt relief may be exactly what you need to get your financial obligations under control.
These alternatives to traditional payment methods can ease the burden of debt, but are they suitable for you? Let’s find out!
First, What’s Financial Responsibility?
Financial responsibility means managing your money (and other assets) in a way that’s productive and works in your best interest.
Some important aspects of a financially responsible lifestyle include:
- Paying bills on time
- Living within your means
- Being prepared for the unexpected
- Budgeting
- Saving and investing
- Managing debt
A responsible financial decision varies from person to person because the type and amount of debt you possess greatly affects your financial priorities.
While having some debt is fine, too much debt can adversely impact your financial health and lead to a high DTI (debt-to-income ratio).
A DTI that’s below 28 percent is generally considered low-risk, and it means you have the cash flow required to prioritize saving and investing.
Anything above 28 percent is an indication that your income is insufficient to support your debt. A high DTI means that a significant portion of your income is dedicated to maintaining your debt, and you should consider debt relief.
It’s Not Just Financial Wellness
It seems like everybody’s got debt, but how bad can it really be for you?
Yes, it’s true, America is in the red – credit card debt is on the rise, and millions of Americans haven’t paid their balances in so long that they have got collection agencies after them.
Debt has a way of touching all other financial priorities. Regardless of who you are—or why you owe money— there’s scientific evidence that being in debt could also be affecting your mental health.
The emotional strain of struggling with debt can be almost as damaging as having your car repossessed or getting your electricity cut off.
Debt causes a feeling of being underwater and being unable to get out, and that can really drag on for extended periods and do a lot of damage.
Debt has also been linked to depression. A 2014 Rutgers University study found that people are more likely to report depressive symptoms when they owe a high amount of unsecured debt and do not feel in control of their financial circumstances.
Enter Debt Relief
Medical emergencies, job loss, and sky-high interest rates can come between you and paying your debt through traditional means.
But whatever is making it difficult to honor your debt obligations should not stop you from settling your debts quickly and using as little finances as possible.
One path to better mental health is dealing with the stress-causing issues head-on.
The good news is that plenty of debt-relief options exist if you have got more debt than you can keep up with and you have a tough time making your monthly payments.
They include:
Credit Counseling – Here, you will receive advice from qualified experts who will help create a plan to deal with your specific issues.
Debt Management Programs – With these programs, the debt management company works with your creditors to negotiate a lower monthly payment to cover all of your debts, while waiving fees or reducing your interest rate if possible. In exchange, you agree to repay the full amount of your debt over a period of months or years.
Debt Consolidation – This strategy also combines unsecured debt, but it pays them off by taking out a loan from a financial institution to pay off the debt. You must still repay the loan, but the interest rate will be considerably lower and you’ll only write one check instead of multiple checks.
Debt Settlement Programs– Debt settlement programs are designed to combine your eligible debt payments into one manageable monthly payment, while the debt settlement company’s skilled negotiators work with your creditors to “settle” your debt for less than what you owe either in a lump sum or over time. While there will be a temporary impact to your credit with debt settlement, there can be significant savings, and it can be completed relatively quickly compared to paying the minimum monthly payment.
Debt Forgiveness Programs – Here, a creditor agrees to erase some or all of the debt you owe them. Creditors typically have programs specifically for consumers experiencing financial difficulty, but there are some conditions you must meet to be eligible.
Bankruptcy protection – This option should always be considered a last resort when other options have been unsuccessful. If there’s no way to repay your debts in five years or less, it might be the best option.
Concerns About Debt Relief
Some debt relief strategies may cause concern due to their short-term effects.
For instance, you may notice that creditor calls have increased or a dip in your credit score.
It’s critical to keep in mind that your number one priority is to tackle your debt as fast and affordably as possible.
Is Debt Relief Suitable for Me?
Let’s look at scenarios where debt relief may or may not suit you.
Debt relief may be suitable for you if you:
- Are behind on credit card bills or other loan payments
- Cannot afford to make monthly minimum payments
- Have a DTI ratio of over 28 percent
- Have tried managing your debt on your own but can’t seem to make any progress
- Are unable to establish a rainy-day fund
- Have contemplated filing for bankruptcy
Debt relief may not be suitable for you if you:
- Aren’t interested in making a long-term commitment to tackling your debt
- Can afford to pay your debt
Tackling Debt Responsibly
If you’re weighed down by debt, not tackling it head-on can leave you open to worse financial issues down the road.
Unfortunately, there are debt relief scams that are determined to take the little money you have.
To avoid ending up with debts even larger than when you started, contact Americor today.
Click here to apply: https://apply.americor.com/new