Countless individuals wish to get out of their credit card debt issues. They also want to improve their financial future. However, many of these individuals feel they will never be able to do so, as they can’t seem to get ahead. They wonder if they are normal and others are in a similar situation. Furthermore, they wish to know why it is so easy to accumulate debt, yet so hard to pay it off.
Numerous factors play a role in how much a person owes on credit cards. The unemployment rate is one factor, as a person who doesn’t have a steady income may find it hard to meet his or her financial obligations. This may lead to credit card use to pay the bills or it may result in the person not being able to make the required monthly payment. The debt then rises thanks to penalties and fees added on.
Individuals in New York may be surprised where they stand in certain categories when it comes to their spending and credit card use. For example, the state doesn’t carry the highest amount of credit card debt. While this information is helpful, what people truly want to know is what options are available to them to get debt relief. They want to understand the options every debtor can consider.
Debt comes in many forms. People need to recognize this when they are looking to obtain relief from overwhelming bills. For example, everyone needs somewhere to live so this is considered a necessary debt. However, credit card debt is not something a person must have. For this reason, when looking at the average debt of a household, people need to know exactly what type of debt the information includes.
According to Value Penguin, the average household in New York has credit card debt totaling $8,764. This places the state at twelfth in the nation in this category, with residents of Alaska having the highest credit card debt. The average household in this state owes $13,048. In contrast, South Carolina households have the lowest credit card debt, with the typical household owing $5,801. Overall, the average household in America owes $5,700 to credit card providers. When balance-carrying households are singled out, this figure climbs to $9,333.
While the unemployment rate for New York, when seasonally adjusted, has dropped to the lowest rate for the month of October 2017 to its lowest level since 2007, those individuals who are unemployed still feel the pain of not having a job and steady income. The civilian labor force, when seasonally adjusted, is at its highest, as of October 2017, since 2007.
Individuals who do have a job, however, may still be recovering from a period of unemployment and bills that mounted during that time frame. As the unemployment rate for the state has stayed below five percent for all of 2017, the hope is that things will change, and people will begin to obtain some relief from pressing debt. Certain individuals will find they need help in achieving this goal.
Cost of Living
Individuals also want to know the cost of living in New York. The first thing people need to recognize is New York has some of the highest state taxes in the nation. The average worker pays seven to 12 percent of their income before it ever arrives in their hands for income taxes. Add to this the high housing costs and a person’s paycheck may be gone before they know it.
Once the basics have been covered, the shocks continue. Products used daily can be twice as expensive in the state, as reported by Smart Asset. In fact, this site reports the average cost of residing in New York City is almost 69 percent higher than the average for the entire nation. Prices tend to be cheaper the further one moves away from the New York City metro area, but the overall state still comes in above the national average in all categories.
Best Places also examined New York in terms of individual categories and ranked each category on a scale. Numbers over 100 show the state has a higher than the national average in terms of cost of living for that category. New York came in above 100 for every category examined when ranked by this provider. For example, the cost of housing in the United States is rated at 100. Live in New York City and the figure rises to 145. These figures are seen in terms of consumer spending for the state, although the Bureau of Labor Statistics comes to a slightly different conclusion regarding certain categories, such as transportation.
Individuals who are in debt often wonder if their spending is normal and where they should cut back. According to the Bureau of Labor Statistics, New York, New Jersey and Pennsylvania household spent approximately $63,752 each year in 2015 and 2016. This is much higher than the national average consumer spending for American households, which came in at $56,648.
In addition, the money spent by households in the New York area was much different than for other households in the nation. For example, New York households spent less on transportation than the national average. However, New York households spent more on housing, personal insurance, and pensions, cash contributions and education than their national counterparts. Their food, healthcare and entertainment expenses, as well as their transportation expenses, were lower than the national average.
This information becomes of great help when a person wishes to get out of debt and budget their money wisely. People can look at these figures and try to find ways to bring the higher categories down to a more reasonable level. Although this isn’t always possible, as housing costs are somewhat fixed, it gives a person a starting point when they are trying to get out of debt and improve their financial situation.
Help Is Available
Individuals who are overwhelmed by debt find several options available to them. Some consumers opt to file for bankruptcy to relieve this debt, but this isn’t always the right move. A bankruptcy follows a person for life and must be reported on certain documents. For these reasons, many debtors find this option is not the best solution for their needs.
Credit counseling should also be considered. This type of service works with consumers to teach them how to manage money, pay off debt, create a budget and more. The counselor works with the debtor to find a plan that works for them. However, each service must be carefully researched, as some charge money for their services and others aren’t legitimate. Consumers need to ensure they choose a company with a good reputation and a proven track record.
Debt settlement options may be offered. However, care must be taken when working with these organizations also. The provider offers to negotiate a settlement of the debt, but they cannot guarantee the creditor will agree to this settlement. Furthermore, money must be placed into a special account for a specific period to settle the debt. People often find they are unable to meet this obligation every month and end up leaving the program.
Debt Consolidation Loans Provide the Solution for Many
Debt consolidation loans need to be researched when a person finds they have more debt than they can handle. With this type of loan, a person often finds they can bring their interest rate and monthly payment down. At least, it can go down to a more reasonable level by bringing together all debts into one loan. Individuals who miss monthly payments simply because they overlooked them find this option is of help. They only have one payment to make each month.
Home refinancing or HELOC
One option with a debt consolidation loan is taking out a second mortgage on the home. You can also make use of a home equity line of credit to pay off debt. People often prefer this option as they may obtain tax benefits by going this route. However, individuals who choose this must make the loan payments as agreed. This is true for both home equity line of credit or a second mortgage. A failure to do so could result in the loss of the home.
An unsecured loan may be a better option to ensure this does not happen. However, unsecured loans typically have higher interest rates. Furthermore, a person who has less than perfect credit, such as those who have already fallen behind on credit card payments, may find they cannot get this type of loan. Nevertheless, those who can obtain an unsecured loan may find they pay less in interest even with a higher interest rate.
If you feel you are being consumed by your debt, consider obtaining a debt consolidation loan. Individuals who do so find relief simply from having only one payment to make each month. They can ensure the payment is made in a timely manner. They may even opt to have it automatically deducted from their bank account to make certain this is the case. The interest rate may be lower than seen with the credit cards and other unsecured debt, also providing much-needed relief. This is an option every person in debt should look at to determine if it is right for them.
In case you want to consolidate your debts but you have a bad credit score, here is a video that will give you the best option to get out of debt.