Best Debt Companys

166 Companies 2,736 Real Customer Reviews

The Debt Tipping Point: How Much Is Too Much?

Posted By:  |  June 13, 2016  |  0 Comment(s)

There are a lot of different kinds of debt, but the most types common are: credit card debt, student loans, automobile loans, and living costs (mortgages). America is not exactly unfamiliar with the concept of borrowing money. In fact, the total U.S. consumer debt is currently around $3.4 trillion.

When Is Debt Considered A Problem?

ID-100265847

Have you ever wondered how much debt you have to have for it to be considered a problem? Because income levels vary drastically across the country, there isn’t a magic number where you should start to worry. However, it is a good rule of thumb to never exceed 10% of your income in monthly credit card debt payments. So for example, if one’s household income is $3,000 per month, the credit card debt bill should not exceed $300. ConsolidatedCredit explains that this doesn’t mean one has to only have a $300 balance between each of the credit cards. In fact, the “minimum monthly payments on one’s credit cards are calculated as a percentage of the total amount one owes.” So, for a $15,000 bill with a 2% payment scheduled on their balance, the minimum required payment would equal $300.

The Danger Zone

Where is the debt danger zone? For an income of $3,000 and a 2% required monthly payment, anything above $15,000 in debt is definitely risking financial distress.

All numbers aside, it is definitely time to reconsider when credit card debt is leaving no room in the financial budget. Barely staying afloat with the minimum monthly payment is a huge red flag, and it is never a good idea to max out a card or be late on making payments.

The Simple Dollar explains that debt is too much when:

  • The debt payments cost more than the home
  • Debt is causing one’s credit score to decrease
  • Because of debt, one is not tracking their payments, and is constantly adding to their balance
  • The debt amount is causing one to live paycheck-to-paycheck

For those who are experiencing any of these red flags, it is time to make a change, and do something about their debt with either debt consolidation or debt settlement.

Sources:

http://www.valuepenguin.com/average-credit-card-debt#average-credit-card-debt
http://www.consolidatedcredit.org/credit-card-debt/credit-cards-201/how-much-credit-card-debt-is-too-much/
http://www.thesimpledollar.com/how-much-is-too-much-debt/

Next Post: Debt by Numbers ->

Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

Recently Reviewed:

Trending Blog Post:

Want us to review a company?

If there is a debt company that you don't see on our site, and would like us to review, please contact us.

Real Reviews (yes they’re real)

With so many debt relief companies out there, and a lack of sites willing to bring you the HONEST breakdowns of each company, what source can you turn to for the real information you can trust?

We are dedicated to bringing the truth out, and rank debt relief companies as they should be. Through our investigation, and experience with each company, we rank each company, and bring you our honest, unbiased opinion. We also include authentic user reviews by past customers of each company that are moderated and verified.

Like many sites, we are compensated through affiliate relationships with each company we review, however all of our rankings are based on our 11-Point Ranking Criteria.

All reviews are subject to moderation and approval. Any reviews that may resemble false information, or competitors of another company will need to be verified by our staff before being approved and published. We reserve the right to approve or deny any reviews left on this site.