A growing financial crisis, specifically credit card debt, is afflicting millions of hard-working people across the state of Nevada. Credit card debt is rising, and without some form of relief, countless families are facing a profound economic predicament that could lead to bankruptcy or foreclosure. But where is it all coming from, and what can be done about it? While the reasons for each person’s debts are as distinctive as the individual burdened with them, some general factors seem to contribute to why it continues growing instead of shrinking. Consequently, there are ways of addressing this debt and finding relief through settlement or debt consolidation.
Contributing factors to the credit card debt
The average credit card debt in Nevada $7,871, and it is likely to increase. Too many factors are working against consumers, with mounting deadlines and reduced job security. Below are listed some of the top contributing factors to this growing fiscal challenge.
The United States is a consumer-driven machine. The latest mobile device is released every few months, the next greatest restaurant or entertainment venue opens, or the next trip to wherever. Americans like to put it on the plastic. It’s like free, endless money.
Advertising agencies spend billions of dollars every year to learn exactly how to get people to part with their money. The problem is, most people don’t want to wait until they have the money. They are content to use their credit cards. And if those cards aren’t paid off before the end of the month, then the interest starts to pile up.
Who doesn’t love a good “free” offer? Credit card companies are always finding new ways of bringing in business, and no way is more effective than a promotional offer. Zero-percent interest for eighteen months. Transfer the balance on any other card with no transaction fee. Sing up today and get ten thousand frequent flyer miles. All of these methods are simply a way to make consumers feel that they are getting more for their money when in reality they are simply creating a bigger hole to climb out of.
The only thing worse than having no credit is having too much. Credit card companies love to extend bonuses to their “preferred clients” by increasing their usable balance. This can be a lifesaver on one hand, but all too often it becomes an anchor that is incredibly hard to get free of. Too much credit invited the consumer to use it. Has that stereo system gone on sale? Has that lovely new dining room set finally dropped a little in price? Having too much credit can end up costing people much more than it saves them.
Sometimes things happen that nobody was expecting. A sudden fire might destroy a person’s home. A marriage that seemed stable might be rocked with infidelity and divorce. A car collision may lead to rental fees or the need for a down payment on a new vehicle. These are all terrible things, and yet they happen every single day to countless people. When these unforeseen events happen, they tend to have a dollar sign attached. Unfortunately, 2 out of 3 Americans do not have enough funds to cover a $1,000 emergency. People tend not to think too clearly when tragedy occurs, and that leads to bad credit decisions.
Health costs in Nevada are 7.7% higher than the national average. This means it costs more to get sick in Nevada, and more to get well. Too often, the only way to deal with these expenses is by using credit. The medical industry knows this and counts on it. Medical prices here in the United States are far higher than in most industrialized nations, and a good deal of that cost is due to the commoditization of debt. It is a terrible thing to owe money due to medical issues. The fear of not being able to be seen or treated is a daily reality for millions of Americans.
Loss of Income
The unemployment rate for Nevada is going up. At the end of November 2017, the rate had risen to 5%. Could this be the start of a disturbing trend? Most Nevadans remember when the unemployment rate rose to almost 14% in the third and fourth quarters of 2010. This upswing could be the telltale marker of just such a recurrence.
As unemployment rises, so too does the risk of job loss and income reduction. It can be a very quick transition between living to your means, to suddenly being unable to pay the bills at all. Once those monthly payments stop coming in, the credit card companies are quick to start adversely affecting a client’s credit scores. Even a reduction in hours can have rapid and harsh consequences on a family.
All too often, this world throws a person a curveball. The car broke down. The roof needs repairs. A toilet stopped working. When things in life go wrong, credit cards are there to offer an easy solution to get things back to normal quickly. Rapid change can be terrifying, especially if it involves children or a home. The ability to apply credit to form a solution often becomes a person’s first response.
Lack of Budget Familiarity
The cost of living in Nevada is 3% than the national average, with 8% higher housing costs and 13% higher transportation costs. Simply put, it costs more to live here. And while most Nevadans firmly believe it is worth it, it does have a cost attached to it. Food costs more. Gas costs more. Insurance and homes all cost more. Unless a person knows how to create and maintain a budget, impulse purchases and consumer-driven spending habits can end up creating a downward spiral that is nearly impossible to pull oneself out of.
Solutions to the credit card debt
Luckily, there are ways to help get a person back to even keel that don’t involve bankruptcy. Almost a quarter million people in Nevada are seeking some form of debt consolidation or debt relief, right now. Knowing the options is the first step to financial recovery. There are two major methods of overcoming credit card debt.
Debt Consolidation Loan
Debt consolidation loans work by bringing all of a person’s separate debts under one single account. Typically this is a lower monthly payment than what they are paying currently, though it tends to be longer in term. These are generally offered to consumers with decent to good credit since it is a credit-based loan. Those who are struggling to manage minimum monthly payments or who have trouble with their credit scores may not qualify.
There are some things a person should keep in mind as they consider debt consolidation. First, think twice before borrowing against a home or property to secure a debt consolidation loan. This brings a very real risk of losing one’s home should something happen and they cannot make their payments on time. Second, don’t be shy about comparing fees between lenders. There is no true altruism in debt consolidation. This is a business and each person is trying to do their job. Ask straightforward questions and get everything in writing before signing anything.
Finally, remember that debt consolidation doesn’t change the behaviors that led a person to this situation. People looking to consolidate their debts under one loan need to be aware of the factors that led them to this circumstance. This should be a wakeup call, one that propels them to make extensive changes in their financial practices. Otherwise, all the consolidation in the world won’t keep them from making the same mistakes twice.
Debt Relief Programs
Credit card debt relief programs are a way to decrease a person’s debts with credit card companies or collection agencies, agreeing to pay back only a portion of the original unsettled amount. This can be extremely beneficial for both the consumer and the creditor since the credit card company is able to recoup on some of what would otherwise be a complete loss, while the consumer pays a greatly reduced total balance.
This is an excellent option to consider if the only other alternative is bankruptcy, and in many cases, high-interest loans and lines of credit can be negotiated down to pennies on the dollar. While this is not a perfect choice for everyone, the best way to deal with mounting debt is to face it head-on.
There are countless reasons why someone ends up in dire financial straits. The system seems rigged against consumers in many ways. But there are options for those willing to look. Not every person who ends up in credit card debt has made bad choices. Sometimes, it’s just bad luck or bad timing. Sometimes, things just spiraled out of control, or a once solid job ended overnight.
These things can and do happen. But when they do, it is important to remember that consumers still have options. Debt consolidation loans and debt relief programs exist throughout Nevada to help consumers get back on their feet. A person should never be afraid to face their creditors. Find help and formulate a plane to take back your financial freedom.
While you are trying to get out of debt, you might want to make sure you have the best financial management skills. Here is a video that gives you the signs that you need to improve the way you manage your money.