San Mateo, Calif. (PRWEB) March 25, 2009
With the economy in a lingering recession, Bills.com offers Americans five questions to find out if they truly are carrying too much debt - and three steps to get rid of that debt.
"With 1.2 million jobs cut in the first two months of this year, housing prices falling, the stock markets dropping ever lower, and general anxiety about the future of the economy, many Americans are in dire straits, or worried that they are on the brink of financial disaster," said Ethan Ewing, president of Bills.com. "Most people don't realize they're in over their heads until it is too late."
In addition to the U.S. national debt of more than $10 trillion dollars, individual Americans owe another $2.55 trillion in consumer debt - excluding mortgage debt. The average American with a credit file is responsible for $16,635 in debt, excluding mortgages.
A "yes" to one or more of these questions signals trouble.
1. Are you having trouble making even minimum payments on credit card and other debt?
2. Are you behind on any monthly payments?
3. Are you getting calls from collectors?
4. Do you find yourself juggling credit card balances to pay off other debts and bills?
5. Are you carrying credit card balances to pay for necessities (food, housing, utilities and auto payments)?
Three steps can help individuals live within a healthy debt threshold.
1. Understand assets, debts. To understand your own financial situation, start by tallying income and expenses. Detail ongoing, fixed monthly expenses such as rent or mortgage payments, and then add variable expenses that are "must-buys." These include food, gas and medicine. Next, set up categories for savings (prioritize building an emergency fund), unexpected expenses and - if enough remains - entertainment.
Subtract total expenses from monthly net income (the amount left after taxes and other paycheck deductions such as health insurance and 401(k) contributions) to find cash flow. If the bottom-line cash flow is negative or does not help achieve your short- and long-term financial goals, immediately commit to paying off debt. Aim for total monthly debt payments to equal no more than 15 percent of monthly income.
2. Pay off bills. Credit cards charge an average interest rate of 14 percent. A missed payment can send the rate skyrocketing to 30 percent or more. The result can be interest that mounts up and becomes unmanageable.
Knock out credit card and other unsecured debt by following this plan:
3. Get help. An individual's best resource is handling debt him/herself, because it protects credit scores. But if that is impossible, understand existing debt relief options.
"Eliminating unhealthy debt provides incredible freedom," Ewing said. "The path you should choose to get that freedom depends on your particular situation and budget."
About Bills.com (http://www.bills.com)
Based in San Mateo, Calif., Bills.com is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 50,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at http://www.bills.com/news_releases/.
Bills.com holds the No. 257 spot on the Inc. 500 list for 2008, and the No. 3 spot on Entrepreneur Magazine's Hot 100 list of the fastest-growing U.S. companies. Company co-founders and co-CEOs Andrew Housser and Brad Stroh were named to the Silicon Valley/San Jose Business Journal's "40 Under 40" list in 2008, and were recipients of the Northern California Ernst & Young 2008 Entrepreneur of the Year Award.