Taking on multiple sources of debt is a balancing act and it’s easy to become overwhelmed. The first thing you should do when considering taking out another loan is to determine your total monthly payments for current outstanding debt and the amount you are looking to borrow. Next, figure what percentage of your monthly income will go towards paying off that debt.
It is recommended that no more than 30% of your take-home pay go toward housing costs and no more than 20% go toward servicing other debt, such as car loans and credit cards. If you exceed these percentages, you could find yourself easily overwhelmed with debt.
Before taking out another loan, experts suggest having a repayment plan in place. Some borrowers find it motivating to pay extra towards the smallest loan in order to quickly eliminate it. If you already have a car loan or credit card payments, before taking on additional debt, you may want to consider refinancing the loan or getting a lower interest rate balance transfer credit card. You can then pay down the principle of the higher rate credit card faster if you transfer the balance to a lower interest rate credit card, provided you continue to make the same monthly payment.
Click here to read more on how to manage multiple sources of debt.
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.