Do You Need Debt Help?
Most people in North America have some form of debt such as a mortgage, vehicle loan, credit cards or payday loans. If you need money in Winnipeg, it is fairly easy to find a lending institution and take out a loan. How can you know though if you have borrowed too much and got in too deep? How can you know if you need debt help or a debt settlement option?
First Things First
The first step in knowing if you need debt help or debt relief is knowing how much you owe. Add up all of the debt that you owe. Make sure you include your mortgage, vehicle loan, student loans, payday loans as well as personal loans. It is important to know your starting point so that you can track your progress and see how far you have come in the end.
Secondly, add up your monthly payments for your loans and the minimums that you pay each month on your credit cards or line of credit. If you have a minimum that changes from month to month, take an average of the previous 6 months to get a good estimate of what you pay.
Next, figure out what your gross income is for one month. If your income changes each month then take an average over the previous 6 months. Also include your spouse’s income if it applies to you.
Take your total debt payment amount and divide your total income into it to get your debt to income ratio. For example if your total income was $5000 and your total monthly debt payment was $2000 your equation will look like this: $2000/$5000 = 40%
What is the healthy range?
A healthy debt to income ratio is somewhere between 0-36%. If you are above that range, you are beginning to enter the unsafe zone. Yes, you may be able to make your minimum payments still, but by just making the minimum payments it can take you years longer to pay off a small loan. If you are in the range of 37-49%, it might be in your best interest to figure out a debt settlement plan before your debt gets out of hand. If your ratio is above 50% then you need serious debt help immediately.
If you would like to learn more about debt settlement or just need debt help, give us a call at 4 Pillars Winnipeg at (204) 201-2100 . We offer a free one hour consultation either by phone or in the office. We will go through your financial situation with you and present you with the best options for you. There is no pressure and we always look out for your best interests.
