Kentucky residents who are burdened with overwhelming financial obligations may wonder how much debt is too much. One benchmark that is often cited is having more in debt than one makes in annual salary. Some advisers say that level of debt signals a problem. Others believe that it depends on the types of obligations. While that amount of student loans could be acceptable, the same level of credit card debt is likely not.
Some say that excessive credit card debt is a signal of a deeper problem. Many individuals who have significant credit card debt have an issue with spending and that without a change in their spending patterns, they’re likely to stay in debt. In fact, one financial planner noted that even if these types inherit money to pay off their obligations, they are often likely to go back into debt if their behavior fails to change.
It is recommended that individuals who are struggling with debt start with a budget. By putting numbers on paper, people may be more likely to adjust their spending and reach their goals. It may also be worthwhile to continue to track expenditures, which will often result in a progressive trimming of the budget as opposed to an unrealistic and dramatic slashing that is unlikely to last. For some people, credit counseling could also be a feasible option. Credit counselors help with setting goals, constructing a budget and even negotiating settlements with creditors.
For those consumers who continue to struggle and are unable to keep up with their obligations even after making these efforts, bankruptcy may be an option. There are income and other requirements associated with a Chapter 7 bankruptcy that an attorney can explain.
Source: FOX, “Uh Oh: My Debt is Bigger Than My Salary”, March 28, 2014