Do You Need Debt Help?

Debt helpYour personal debt-to-income ratio is helpful because it can serve as a benchmark of your financial well-being. A low debt-to-income (DTI) ratio means you have a healthy amount of debt for your income level, while a high DTI ratio means you may be on the verge of financial distress. You can use your DTI ratio to gauge where you are with your finances and what steps you need to take to get where you want to be. Using and knowing your DTI, you are better equipped and more informed about your financial health, so you can take measures to correct potential issues quickly and effectively.

Not every debt problem can be solved on your own. Eventually, you may reach a point where your debt load is too much for you to reduce on your own using traditional means. When this happens, you need to find an alternative that will allow you to get back on the right financial path with the least amount of damage to your credit and your financial future. If you’re currently facing this situation, give us a call at to speak with a certified credit counselor for free. He or she can evaluate your debt and help you find the right solution for your needs. You can also get started online with a request for a Free Debt Analysis.

The Ideal DTI Ratio – 36% or less

Ideally, when you calculate your debt-to-income ratio, you want the number to be at or below 36%. Experts agree a consumer should carry this amount of debt in relation to his or her income level. When your DTI ratio is below 36%, you should have plenty of available cash flow to cover all of the regular expenses in your budget. You should also have enough money left over each month to achieve the 10% savings target that’s recommended for consumers.

The Critical DTI Ratio – 50% or more

On the other side on the coin, when you have a debt-to-income ratio that is 50% or more, it’s a sure sign of imminent financial distress. Carrying this much debt means you’re likely struggling to keep up with your monthly expenses and that you have no money left for savings. If you’re not already facing financial distress, this level of debt is not sustainable so it’s likely you could face financial distress soon.

In addition, at a 50% DTI ratio level, you are also unlikely to have enough available cash to implement an effective debt reduction strategy. As such, you are almost guaranteed to need help with your debt problem. If you’ve calculated your DTI ratio and it’s above 50%, don’t wait to seek help! Putting off finding a solution can actually limit the number of options you have for debt relief. Call Consolidated Credit today at to speak with a certified credit counselor or get started online with a request for a Free Debt Analysis.

What to Do When You are in Between the Ideal and Critical

When your ratio falls in between 36% and 50%, it takes a little more work to decide if you need debt help or if you can handle it on your own. The following questions will be important in helping you make the decision in seeking debt help:

  • How much available cash flow do you have in your budget each month?
  • Has your debt already started to have an effect on your credit – i.e. have you started to pay late or miss payments, or have you reached the maximum credit limits on all of your credit cards?
  • What are your credit scores?
  • If you have a significant amount of free cash flow in your budget, you may be able to implement a debt reduction strategy to reduce debt on your own. This is when you use your available cash flow to make extra payments on your credit cards and other unsecured debts to reduce your unsecure debt burden quickly. Reducing the amount of unsecured debt you carry typically fixes most consumers’ problems with too much debt.

    If you do not have a significant amount of available cash but still have strong credit that hasn’t been damaged by your increased debt load, you may still be able to address your debt on your own. In this case, you may be able to implement a do-it-yourself debt consolidation strategy that will allow you to consolidate your debt so you can get back on the right financial path.

    If you don’t have the cash flow to reduce debt and your credit scores are too low to get you the right terms on a do-it-yourself debt solution, you need debt help. Call us today at to discuss your options for debt relief for free with a certified credit counselor or take the first step online with a request for a Free Debt Analysis.