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Financial challenges can undo even the best debt strategy

Contacting your credit card company to ask for a reduction in the interest rate it charges you is just one of several strategies you can employ to make your financial life a bit more manageable. Creating a plan to help you manage the debt you have and to limit taking on more debt than you can comfortably handle is what financial planning authorities usually recommend.

Keeping mortgage payments at 28 percent or less of your gross monthly income is another way to avoid getting in over your head. Overall debt payments should not exceed your gross monthly income by more than 36 percent, and credit cards, student loans, car payments and other consumer debt payments should be no higher than 20 percent of your net income.

Getting control over your debt is possible when you are working and have an income upon which you can depend, but unanticipated unemployment or an illness that makes it impossible for you to work and burdens you with medical debt can leave your financial plan in a shambles.

An unexpected loss of income can lead to a vicious cycle of debt with your credit cards becoming a readily available source of buying power. Unfortunately, by the end of the month, your credit card debt that offered you the opportunity to buy things quickly becomes another financial burden.

When unexpected events toss your financial plans to the wind replace them with delinquent payments, a Louisville, Kentucky, bankruptcy attorney might be of assistance. An attorney might be able to suggest options to help you to stop creditor harassment and avoid wage garnishment while offering you a fresh financial start.

 

Source: Forbes, “Debt and Credit: It Pays To Know Your Limits,” Aug 19, 2015

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