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Debt Elimination
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However, you would be surprised to learn that the majority of wealthy people do not use it in this manner. These people, in fact, do just the opposite - they employ good money management practices.
Debt-free-living may seem like an impossible dream in today's society. If you want to purchase a house, car or many of the other luxuries you may enjoy, you almost have to have credit.
This in and of itself is not necessarily a problem, but when you purchase a car that sports a price tag that extends way beyond your budget or you purchase too much house for your budget, you are going to run into trouble.
Credit is not an evil monster that you must slay, but when credit gives way to this heavy financial burden it does begin to get ugly. It is that burden that you want to avoid and the only way to do this is to live within your means.
There are ratios for HUD and FHA for qualifying for a home loan. On April 13, 2005 the debt-ratio was increased by HUD to 31/43. A ratio is the relationship between your income and your expenses. This ratio is generally expresses as 31 over 43 or 31/43.
This ratio was also adopted by the FHA and is standard. In this ratio, the first number, the - top end number - is 31. This means that 31% of your income can be allotted for your housing expense. In other words, if you make $3,000 a month, then your 31% housing expense would be $930.
The second number, or bottom end number is 43% and it represents the total monthly-debt that you have. This includes your housing expense and any other that you may have such as credit cards, loans and child support. So, if you make $3,000 a month and your total expense is $1,290, then your bottom ratio is 41%.
Now, some people do get approved for loans and are beyond this ratio, even as high as 50%, but this ratio is a very good guideline if you are in the market to purchase a home. You do not want to get too much house for your budget and this ratio can help keep you in check.
A debt-adviser can help you make good decisions and help you get-out-of-debt should your credit endeavors fail.
They can offer solid advice about new credit cards, how to spot - junk - credit cards. They can also help you avoid going into-debt and even give you advice on disputing credit report errors and how to handle a job loss from a financial standpoint. A good adviser can also tell you if the house you are about to purchase is a good move for your budget.
You are not alone. Consumer-debt as a whole is at a record high, totaling more than a trillion dollars. This does not even include mortgages, but is mostly credit card and car loans.
This is a huge figure. The estimates vary depending on which financial expert you wish to quote, but the average American household has a credit card amount of somewhere between $9,000 and $12,000. Even the low end of this figure is quite disheartening.
Paying-off-debts may sound easy and many of the debt-elimination-programs may make it look easy, but, let's get real. It is not easy. It requires will, determination and discipline.
It will not happen overnight, so you need some patience as well. It is amazing. It takes such a short time to get into, but much, much longer to get out of it.
Debt-repair is an option, but you still need the patience and discipline. There are so many different ways to tackle your-debt, if you owe you just need to find out which program works best for you.
Just keep in mind: The only debt-to-wealth program that is 100% for real is the one that has you legally pay off your-debt and get wealthy the old fashioned way - earn it.
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