It is safe to liken today’s debt to income ratio to a very tall, very unstable ladder. We are at the top of this shaky piece of metal, hoping the wind doesn’t blow too hard and tip the delicate balance we call our finances.
The key is to come down from the ladder and build a more stable financial foundation. It is time to re-establish order and potential in our personal finances. Take a moment to look over this summary of a few effective ways to establish healthy personal finances.
Confront debt head-on
The best way to begin taking control of debt is to identify it all. Lay out every piece of debt owed, and arrange them in order of interest rates with the more expensive rate at the top. This will present an accurate image of just what is owed.
Figuring exact debt-to-income ratios will also help to present a clear view of the situation. To correctly calculate a debt-to-income ratio, add up everything owed, and divide it by the individual’s yearly income. The higher the outcome, the more worrisome a person’s ratio. Ideally, individuals will achieve a number below 0.19.
Here is how the ratios break down:
- 0 – .19 (Not Bad)
- 20 – .34 (Fair)
- 35 – 1.0 (Poor)
- 0 – 2.0 (Warning)
- 0 or more (Oh, hell)
Consider debt consolidation
Debt consolidation is one way to wrangle in a slew of extraneous debts, and combine them into one simple monthly payment. There are a million and one different debt consolidation agencies, so it is best to put in a bit of research before choosing a company to help.
Research debt relief programs
Similar to debt consolidation, debt relief programs are run by financial agencies seeking to help customers eliminate their debts. Relief programs focus on negotiating down high balances and choosing what can be paid in a lump sum payment.
It behooves individuals to invest time in researching several different relief agencies to gain a proper perspective on the company’s performance. It could really damage a person’s future to link up with a company that provides horrible service.
Earn more income
Yes, it sounds a whole lot easier than it truly is, but it is possible to earn more income. The internet is a wonderful world of possibilities when it comes to earning a quick buck. Many online employment opportunities are extremely versatile and work on the individual’s time schedule. Here are a few legit online earning options.
- Freelance content writing
- Take surveys and test out apps
- Work for Uber or Lyft
- Sell stuff on Craigslist, eBay, or Etsy