Did you know that household debt for the entire nation has almost reached its highest point since 2008? That’s when the Great Recession started, but experts don’t think that household debt will spark off another economic crisis anytime soon. However, that doesn’t mean that this load of debt won’t overwhelm you and cause your own personal financial meltdown.
Do I Have Too Much Debt?
It’s estimated that U.S. households owe $12.58 trillion in debt, which is 0.8 percent lower than the high point in 2008. Now, most of that debt load is considered good debt because it is on things like mortgages and student loans, but that good debt can go bad, depending on your circumstances. If you are worried that your debt load has grown beyond what you can handle, here are some questions you need to ask yourself.
- How much debt are you comfortable with? – Does having as much debt as you have make you uncomfortable or nervous? Well, then you might want to examine those debts and compare them to your income. You may learn a valuable lesson about your finances.
- Are you regularly saving money? – Your savings are a strong indicator of how much debt you have. Experts recommend having around three months of expenses saved up unless you have an unstable job situation. If your employment isn’t solid, experts recommend saving between six months to a year worth of expenses saved. If you are unable to save up, this could be a sign that your debts have grown too large to handle.
- Do you count the days till your next paycheck? – This kind of behavior might indicate that you are living from paycheck to paycheck. That means your non-debt expenses and debt are outstripping your earnings. Sometimes this can be solved by adjusting how much you spend on entertainment and eating out, but if adjusting those won’t help, you could have a debt problem.
So How Do I Fix My Debt Problem?
If you find that you are in too deep when it comes to debt, there are several things you can do to crawl out of the hole.
- Start a Budget– Look at your expenses, look at what you earn, compare those numbers and calculate what you need to be spending to save some cash.
- Upgrade Your Job– If you’re not earning enough at work, ask for a raise, and if that isn’t possible, perhaps you should consider a new job.
- Negotiate– Many people don’t realize they can negotiate with their creditors. Your bank or credit card company wants you to pay off your debts, and they have programs to help you do it. Consider getting a loan modification or try to get that credit card interest rate lowered.
- Bankruptcy– If not even these methods are helping to solve your debt problems, then it might be time to declare bankruptcy. It is the nuclear option for your finances, but if you are drowning in debt, it may be your best option.
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