Have your costs increased, while your earnings have decreased. You may be unemployed or underemployed. Perhaps you formally earned five times as much as you do now. Now you’re reduced to working 4 part-time jobs to keep a roof over your family’s head. Whatever the cause of your financial strain, currently you are struggling to make ends meet; and you’re drowning in debt.
When your earnings shrink faster than your expenses, the tally for your expenses continues to grow while the ability to pay does not increase. When you earned five times as much income, you debts were more manageable, but when your pay shrank your responsibilities did not shrink. They remained the same. Now with less income you’re still attempting to pay those old bills.
Your monthly bill payments may be as much as 70% of your gross earnings. Leaving you only 30% for basic living expenses, which means you are probably behind on your payments. You pay the creditors that really are important, like the mortgage and utilities. Other creditors are paid when you absolutely must pay. If you find yourself in this type of situation, then without a doubt, you are drowning in debt.
A healthy debt ratio is 15% or less of your gross income. Higher ratios begin to be overwhelming. A ratio of 50% or higher is an indicator that you are in trouble. Make every effort to increase your income and lower your debts to get down to a more manageable ratio. If needed, you may have to get another job to pay debt down faster.
Advertisement: (Scroll down to continue reading)
Consider bankruptcy, if there truly are not other alternatives. It your credit is already suffering greatly, bankruptcy may be an improvement, cleaning the slate of outstanding debt and allowing you to start over without it, also giving you the ability to accumulate debt that is more in keeping with your new lower income.
Other posts you might like:
- Getting A Qualifying FHA Debt Ratio
The FHA debt ratio is based on the buyer’s gross income divided by the mortgage payment and the mont…
The Solvency Ratio Formula
One way of obtaining a good measure of a company’s coping ability in matching its long-term obligati…
High Debt To Income Ratio Loans And Their Impact On The Mortgage Industry
The mortgage meltdown can be traced back to sub-prime lending institutions making high debt to incom…
Getting No Equity Debt Consolidation Loan
Getting out of debt can be almost impossible when you are trying to pay off a credit card or several…
FHA Debt To Income Ratio
To be approved for a FHA loan it requires your highest percentile. In order to apply for a mortgage …
Getting Child Tax Credit
The US government estimates that a middle-class family has to spend around $15,000 a year to raise a…
How To Solve Debt Problems
People who feel as if they are drowning in their debts have a few options available to them. With th…
{custom}
