Get your debt analyzed today
Paying off debt is an important part of any financial strategy. Ideally, the percentage of debt you have, compared to your income should be in the 20-35% range. However, we all know that this isn’t possible for many people. Mortgages, student loans and credit card debt all need to be paid off, and those payments take up a substantial portion of your income. If you would like to know how your debt stands up against your income, consult a debt management specialist. Many debt management companies offer a free debt analysis to help you determine your next move in the debt reduction game.
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What is a debt analysis?
In short, a debt analysis monitors your monthly income and compares it to your monthly debt, referred to as a debt to income ratio. When you are in debt and are seeking help from a professional debt management expert, they will likely perform a debt analysis on you, measuring your debt load and income. Particularly in cases where debt restructuring is feasible, a debt analysis is probable. When a debt analysis is conducted on you, a lower debt to income ratio is preferred.
Let’s say that after a debt analysis, it’s shown that you are using 35% of your monthly income to repay debt. While this is on the high side of moderate, it is generally still considered good. Lenders would view this amount of debt as acceptable, so you should not have trouble qualifying for a loan under these circumstances. However, let’s say you are using 50% of your income to repay debt. This is where your debt load starts to get the better of you. Let’s say you take home $3000 after taxes each month. Half of that amount, $1500, is going solely to repay debt, leaving you with $1500. Seems great? Well, now you have to factor in food, gas, family costs in addition to the savings you should be adding to every month and your debt seems to be eating away much more of your income than it should.
Using your debt analysis to get out of debt
A debt analysis is a good test to determine your debt load and your ability to carry more debt. For example, if you’re in the low-range debt ratio category, you would be able to handle more debt, so investing in a new family car would be a viable option for you. However, if you are in the high debt ratio range, accumulating more debt would be a huge burden for you. Losing your job could put you into bankruptcy mode.
Before your debt escalates out of control, you should consult a debt management expert for a free debt analysis or consultation. They can show you where your money is going—what goes to pay of debt, what goes to savings and where you are spending frivolously. Some people think they are drowning in debt, yet when they meet with a debt analyst, it becomes apparent that their debt is manageable but poorly organized. On the other hand, there are people who spend 70% or more of their monthly incomes on repaying debt, yet don’t believe there is a problem. A free debt analysis is available for you. It will probably be one of the best things you didn’t have to spend your money on.
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