How Much Debt Is Acceptable?

Almost all of us have debt of one sort or another today and borrowing money to support our lifestyle has become a normal way of life. But how do you decide just how much debt is acceptable and whether or not you have reached the limit as far as your borrowing is concerned? This is not an easy question to answer and will vary from one individual to the next. However, there are some basic guidelines which you can follow.
Credit card companies and other lenders know only too well from their extensive lending history just when it is safe to lend money and when it is not and they have a very strict set of rules which they have devised and refined over the years. It is not a bad thing therefore when looking at your own debt to try to think a little bit like a credit card company or other lender.

A good place to start is by looking at your own credit history and the amount of money you have borrowed over recent years and the ease with which you have coped with that debt. If you have had no problems meeting your repayments on time and have not had to penny pinch in order to support this level of debt then you might well feel that you could take on additional debt. However, if you have struggled to keep on top of your debt and have run into problems making repayments, perhaps making some payments late or having to re-schedule some of your credit agreements, then the chances are that you have already taken on more debt than you can handle and should be looking to reduce your debt rather than to increase it.

As well as looking backwards however you also need to look forward because circumstances will change in all our lives and even if you could not afford to borrow money last year that does not mean that you cannot afford to borrow this year. However, your forward predications need to be based on more than just wishful thinking.

For example, expecting a promotion or a pay rise is not the same thing as knowing that you are getting a promotion or pay rise because you have received written notice of your good fortune. Similarly, money expected from the sale of stock which you are currently holding in six months time cannot be relied upon until the sale is actually made.

One very important and often difficult aspect to borrowing is trying to predict just what is going to happen to interest rates in the future. A 3 year variable rate loan today at 5% might look great but could prove to be disastrous if in 12 months time interest rates have doubled to 10%. And if you think that this would never happen then just take a look at history and the millions of people who have been caught out by just this situation in the past.

When it comes to figuring interest rates into the equation there must inevitably be some guesswork but look to the professionals and see what they feel about the market. Look for example at things like the bonds and futures markets. If you see that 5% bond option prices are falling then the professionals are signaling that they believe that interest rates are on the way up.
At the end of the day only you can decide whether or not you can afford to take on more debt, have it about right now or should be looking to reduce your level of debt, but putting yourself in the position of a lender when assessing your current position is often a good way to make that determination. In simple terms ask yourself whether, if you were a lender, you would loan yourself $15,000 at 6% over the next 3 years.

Remember too that it is very easy to get yourself into too much debt but far harder to get yourself out of debt. A growing number of people today are finding themselves in the position of having to ask for debt assistance and you do not want to find yourself in that position.


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A Credit Card Debt Consolidation Loan: One Person, One Bill, One Statement

Credit card debt has become a global problem. People are facing debt problems because they are spending extravagantly and using their credit cards instead of putting their finances through close scrutiny. When people use credit cards they are subject to a high interest rates on those credit cards and even though they may just be spending $20 for a tank of gas, and then all actuality with a 19% interest, they are paying $21.90 for that same tank of gas.

Credit cards are fun and they can provide you with a security when you are low on actual cash, but the abuse of credit cards can cause you to go into serious financial debt that may sometimes seem like a cycle of debt that you can never get out of.

If you are in this situation you may want to look at getting a credit card debt consolidation loan. A credit card debt consolidation loan is granted by many financial institutions and a majority of banks. The advantage of getting a credit card debt consolidation loan is that the loan will get a quick approval and usually the approval process is hassle free with little or no red tape. You can apply for a credit card consolidation loan on the Internet and have the application process completed online. This will allow you more time and with the granting of the loan, you will be debt free from your credit cards and only be responsible for the loan repayment.

There is usually no processing fee when you apply online for your credit card debt consolidation loan. You may even get a better rate online then many banks or other financial institutions that offer a brick-and-mortar setting. When you apply for a loan you either have too apply for a unsecured loan where you will receive a higher interest rate but you don't have to put your personal belongings up for scrutiny. If you want a secured credit card debt consolidation loan then you would have put up a possession such as your furniture or a car as collateral just in case you do not pay the loan back. This will allow you to have a lower interest rate and pay more on the balance of the loan instead of the interest.

Credit card debts become manageable because you will be able to pay one payment know what that payment is. If you have several credit cards, the statements come at different times and you don't know if the amounts will be the same each month. This will give you poor financial planning and in the end will cause you to spiral into debt. By paying the one payment on time and paying even more than that payment, you will be able to bring the balance of the consolidation loan to a manageable balance and this will allow you to have more money for other purchases and build your credit rating at the same time.

The best thing about a credit card secured consolidation loan is that there will be no more harassing phone calls demanding money. You would deal with one company, one bill, and one statement. No more will your mailbox be filled with bills that are not only hard understand, but they are hard to handle financially to be paid off in a proper time period.

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