Is Breaking Even Bad For Your Financial Future

According to recent statistics, the majority of Americans are still struggling financially regardless of their income level

. The current personal debt-to-income ratio in the U.S. continues to hold at 110 percent, meaning most Americans are still spending more money than they are making. While this ratio has decreased significantly since the start of the Great Recession in 2008, it means most people are barely scraping by or just breaking even.

Although you may think breaking even is doing pretty well in a market like this, in truth you are walking a tightrope over financial disaster. One emergency or unforeseen expense can cause serious difficulty in your ability to stay on top of your finances. Whats more, breaking even usually means you are not saving, so youre walking this tightrope without any safety net to protect you and your family.

With this in mind, its essential to find ways to improve your financial outlook so youre doing better than just getting by. Start by assessing your budget to see if you can implement a debt reduction strategy. With this strategy, you streamline your monthly budget to free up as much money as possible to pay off your debts. Focus the money you can allocate on paying off one credit card debt at a time. Each debt you pay off frees up more money to put towards paying the next debt off. You can start with your smallest debt if you need to build cash momentum or you can start with your highest interest debt since it builds interest the fastest.

In some cases this kind of do-it-yourself debt reduction strategy is enough get you back on track. In other cases however, your debt burden may be too big for you to pay it off in-full on your own in a timely way. If so, you need to seek help to find an alternative debt relief option. The easiest way to start is to contact a nonprofit credit counseling agency to review your situation and discuss options for relief.

Bear in mind not all credit counseling companies are nonprofit. For-profit credit counseling companies still provide quality service, but you may be required to pay for your initial debt consultation or you may have to agree to certain obligations before they provide you with any advice. A nonprofit credit counseling agency has the same certified credit counselors, but you can get an initial evaluation with no charges or obligations to sign up for any service.

As you decide which credit counseling agency to use, make sure to do your due diligence in checking their Better Business Bureau rating, as well as online reviews from customers. You dont want to take any chances when it comes to your finances, so you want to choose a credit counseling agency that has a A+ rating with the BBB and a good history of helping their clients successfully. This will help ensure you find the right debt solution and start on a path to a brighter financial future as quickly and easily as possible.

by: Claudia Humphrey

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