How to Confront Your Debt

Published on April 25th, 2020

Sometimes, the only way to get past something is to go through it. Understandably, many people live with increasing debt due to their hesitance to confront the situation directly. The stress and burden of daily routines is often enough to push long-term problems—like mounting debt—to the backburner. Of course, this does nothing to help the situation. If you’re beginning to feel like you’re in deep, it’s time to look for ways out. Here are some steps to try:

1. Figure Out Exactly How Much Monthly Debt You Have

For many, determining the exact amount of debt they have to their name is an upsetting process.  As   difficult as it may be, the sooner you do the better. Take some time to tally up your monthly auto loan, credit card debt, student loan, rent or mortgage, etc.

2. Calculate Your Debt-to-Income Percentage

Use the figure you determined in step one and your monthly income to determine your debt-to-income percentage. If you are currently making $5,000 per month and have $2,500 in monthly debt, your debt amounts to 50% of your income (or 0.5 when represented as a ratio).   The Federal Reserve considers a debt-to-income ratio of 40% or more a sign of financial stress. The perspective gained from seeing this total will help you assess the options you have for dealing with your debt.

3. Ways You Are Accumulating Debt

For some, debt is acquired in truly unavoidable ways, such as through medical costs.  For many others, debt is accumulated through unwise credit usage or the acquisition of one or more high-interest loans near River Grove. If you have gotten into the habit of relying on payday loans or have been spending outside your means, it’s important to reflect and seek to change these behaviors.

Determine Your Strategy

Once you have taken these steps to confront your debt and made changes to your spending to stop its growth, you will need to come up with a plan to pay it down. Depending on the amount of debt, budgeting monthly expenses for a while may not be sufficient, or do little to bring down your overall total.  Make a determination of expenses that can be cut with lower alternatives or dropped entirely.  In addition to reviewing expenses, those dealing with great amounts of debt should seriously consider taking steps to improve their overall income, such as acquiring a second job, selling belongings, or seeking out a higher-paying position if possible. Many financial institutions, including Leyden Credit Union, can also help by providing credit card relief loans near River Grove.

Contact Us

Our credit union offers many options to help members recover from their consumer debt along with free financial counseling. Whether you are struggling with your debt—or proactively looking to avoid creating it—please do not hesitate to reach out for more information on our services today.

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