Credit card debt issues are common in all areas of the country, and Virginia is certainly not an exception. In fact, Virginia is one of the states with the highest credit card debt. Different areas of the nation experience different problems leading to credit card payment difficulties. That’s why ideal debt reduction solutions for Virginia residents may be somewhat different than those in other regions.
Getting to the Root Causes of Credit Card Debt in Virginia
Before determining the best ways to reduce or eliminate unsecured debt in Virginia, it’s important to grasp how debt problems in the state occur. Since debt and income are, obviously, closely related, Virginia residents need to understand how the state ranks compared to other states.
Per Capita Income
Virginia residents enjoy a per capita income of approximately $34,967, which is well above the national income of slightly over $28,000. However, its basic income figures don’t tell the whole story, as the cost of living in the state is also higher than in other states.
Ownership rates in the state are slightly above the national average, with just over 67 percent of families owning their own homes versus ownership rates of slightly under 65 percent in the remainder of the nation. The median home value in the state is considerably above the national average, which suggests many of the state’s homeowners may be paying a higher percentage of their income for mortgage payments than property owners in other states.
Cost of Basic Commodities
Food costs in Virginia are significantly higher than in other states, which can place a significant burden on families. While the higher price tag may not impact some residents, others may find it difficult to provide sufficient food for family members without scrimping somewhere else. Average utility costs are also higher in Virginia than in other states. Industry statistics state Virginia residents pay well over twice the national average for electricity.
Like other parts of the nation, Virginia residents are experiencing increases in the cost of health insurance and other medical expenses. According to statistics, the annual premiums in 2017 increased by up to 3% from 2015. Again, not all residents are impacted to the same extent, but any increases in costs without offsetting income increases tend to create hardship for families.
Of course, there are other expenses Virginia residents must contend with. Vehicle payments, the cost of commuting, and insurance premiums also put pressure on family budgets. The costs of new cars have increased far more than inflation, and the complexity of new vehicles means average repair costs are also climbing.
How do all those expenses relate to credit card debt? Although the answers to that question can get complicated, the short answer is that, when pressure is placed on family budgets, credit cards use goes up. As those credit card balances increase, it gets harder to pay monthly payments. For many people, the problem spirals out of control quickly as an increasing percentage of net income is needed just to pay minimum payments due on the credit card debt.
What Happens When Credit Card Debt Gets Out of Hand?
At some point, credit card debt becomes almost impossible for residents to comfortably deal with. Monthly credit card payments begin to consume enough of the budget that paying rent, mortgage payments, utilities, and other expenses becomes increasingly difficult. Once that threshold is reached, facing financial realities can become quite problematic.
Creditors may begin calling about missing or late payments. At this point, things are really getting serious, as credit ratings are threatened and utilities may be suspended unless they’re brought up to date. Credit cards may also be deactivated if payments are in arrears. So, what can people with too much credit card debt realistically do to resolve their financial issues?
Facing the New Reality and Budgeting
Things may appear to be out of hand. However, there may still be ways consumers can deal with their credit card and other unsecured debts. Establishing a strict budget and sticking to it becomes a necessity. It doesn’t matter if there is an existing budget in place. It is important to explore ways to pare expenses so repayment of existing debts is possible. Here are a few ways consumers can cut their budgets immediately.
Stop eating out
The majority of people eat several meals out every week. Although dining in restaurants is convenient, the average cost of a restaurant meal is considerably higher than one prepared at home. Even if it’s hard, reduce or eliminate eating out until the bills are under control.
Avoid pre-packaged foods
Buying expensive prepared meals is costly. Instead, buy the ingredients and prepare your own meals. Food experts already suggest shoppers avoid prepared foods. This means you’ll be eating healthier and saving money at the same time by taking care of food preparation yourself.
Explore less-expensive entertainment options
Going to movies and other entertainment venues are also expensive. At this point, it’s time to avoid any entertainment expenses. Yes, it’s a sacrifice, but desperate times require desperate solutions.
Cut cable or satellite costs
Most areas have multiple options when it comes to television use. Some communities have many free television stations available. That may make it possible to temporarily discontinue costly cable or satellite television subscriptions. For example, Virginia Beach currently has ten free, over-the-air television channels anyone can get using an antenna.
Cut commuting expenses
Many Virginia residents can significantly reduce commuting expenses by ridesharing or using public transportation rather than driving to work alone every day. If you’re currently spending $35 for gas twice a week, cutting that in half would free up an extra $140 or more per month that can be used to reduce credit card debt.
Cut utility costs
This is actually quite easy, although cutting utility costs does require a little bit of thought. Every home is somewhat different, which means what works for one family won’t work as well for another. Turn the thermostat down to minimize heating costs. You can shut off all lights when no one is in the room. Or you can consider reducing the temperature of the hot water heater. Look at your energy consumption and consider ways to reduce electricity and gas use in your own home.
Cutting back on expenses is never going to be easy. However, there are ways to do so without causing too much discomfort. Tailor the cuts to your own needs. Do not just reduce it without thinking of your personal preferences and lifestyle options. It will only make the sacrifice all the more difficult.
Some people benefit greatly from credit counseling to help create a workable budget. Many communities have free services available to provide help, so look at the available options if the budgeting process is proving difficult.
Taking Things to the Next Level
If nothing seems to be helping to get your credit card and other unsecured debts down, there are a couple of other options available to Virginia residents. Debt consolidation loans and debt settlement options can have an immediate impact on total debt and repayment pressures from creditors.
It’s important to remember that some financial solutions have a greater impact on your credit rating than others, so it pays to ask upfront what effects consolidation loans and debt settlement options will have on those scores. However, slow repayment of debts also negatively impacts credit ratings, so taking advantage of debt consolidation or debt settlement options may make things better rather than worse for long-term credit ratings.
How Does Debt Consolidation Work?
The process is actually quite simple. Rather than having to deal with multiple creditors and struggle to make monthly payments, consolidation loans are used to repay outstanding debts. You will, instead, pay one lower amount each month. In most cases, those with more than $10,000 in credit card debt can find this type of solution works well for them.
Is Debt Settlement a Better Option than Consolidation?
Debt settlement works differently than consolidation. A settlement company contacts creditors to negotiate a lower price to settle a debt with a specific creditor. The process must be repeated with each creditor, and creditors are under no obligation to work with the settlement company.
The settlement process can, indeed, end with a person paying a lower amount. But there is no guarantee that will happen. When considering a debt settlement option, consumers may also see their credit rating suffer. At least more than when some other options are used. Again, however, every situation is different. This means anyone with a significant credit card or other unsecured debts should explore all their options. At least before deciding which solution best fits their needs.
If you find yourself thinking about filing for bankruptcy, consider using debt settlement first. Here is a video that might be able to help you decide which is the better debt solution for you.
Get Started Now
If you’re experiencing financial difficulties, they won’t get better by themselves. Ignoring financial problem is the worst thing anyone can do, so take the first steps for resolving your financial issues today.
Of course, it pays to try the easiest solutions first. Set up a revised budget and cut expenses to free up money to repay existing debts. If that doesn’t resolve the problem, look into other solutions. If debt consolidation will work, that may be a good solution, as consolidation is relatively quick and easy assuming your credit isn’t already too damaged.
In some cases, debt settlement may be the best recourse. Discuss the options with a debt relief specialist to determine which option would work best to resolve your needs. The most important thing, in all cases, is to face the problem today and get your finances back under control.