Juggling Your Debt To Income Ratio
Tuesday, August 11th, 2009 Subscribe To Our Feed
One of the hardest things is to hear the phrase I’m sorry but your debt to income ratio is too dangerous. When this is the case, you may find yourself in difficult financial waters, especially if you are considering making plans to buy a house.
Even if you have never made a late payment in your entire life and have always paid your debts on time, a severe debt to income ratio can really define your financial loans future.
Any significant loans you may have can can really color your debt to income ratio. Considering your age, it may be required to entertain the idea of somebody co-signing on your loan for you to be approved for a mortgage. Making positive steps in your debt to income ratio can have an almost magical impression on how you are treated in the world of finance.
The first place to start in taking control of the situation with your ratio is to cut up your credit cards. Therates of interest on credit cards is ordinarily the largest single barrier you will need to tackle. Even if you can only afford to contribute an extra $20 each month as small but steady dents in your primary loan amount can make a big difference. One popular strategy is to transfer your highest debts and interest rates to 0% interest rate cards, so it’s possible to pay off more per month. Savings from no interest rates can mean your debts can decrease noticeably.
Figure out what your debt to income ratio is and attack it. You are dealing with your future here.
Until recently, I had no idea that I had been gradually falling into debt for the last few years. I took on a home loan, spent thousands of dollars on a state-of-the-art home entertainment system, took a few pricey holidays, and put one kid through college. I knew that I was making debt payments that were steeper than I desired, but I had no idea how far it had gone.
The truth was that it had grown so dramatically in the last few years that I no longer had the money to support my lifestyle. I needed to eliminate some of that debt!
I entered my scary numbers into a debt consolidation estimator and was both apprehensive and relieved that it was achievable to dig my way out of debt if I took action now. All was not lost.
I secured a debt consolidation mortgage loan, reduced the amount of money that I spent on vacations, and changed my priorities. When all the calculating was done, I had a plan that would re-balance my debt to income ratio within 12 months. I have learned a lot and now know enough to never go there again.
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