STARTING A BUSINESS NOW

When thinking about personal debt, most people think in terms of monthly
payments. They will consider making a large purchase if the monthly
payment seems affordable. Fifty dollars a month might not sound bad on
the showroom floor, but even a small amount can have far reaching
consequences if the debt overextends the debtor.

How about you? Can you afford any more debt? The answer may be as easy
as a simple yes or no. More than 40% of debtors spend more than they
have coming in. How is this possible? Many don’t even realize what they
are spending. They know they don’t have grocery money and that their
bills aren’t getting paid on time.

However, many do not realize that they are steadily falling behind until
it is too late. Before you will know if you can afford more debt, you
need to know how much personal debt you have now. Take out all of your
bills and add them up. Be sure to include utility bills, insurance
payments, groceries, splurges, etc.

Write down everything that you spend and subtract it from your net
income. If you spend more than 60% of your net income, you cannot afford
more debt. If more than 38% of your monthly payments go to creditors,
you cannot afford more debt. Another huge consideration to make is the
economy.

The above numbers are ideal in an ideal economy. Special allowances
should be made for the current state of affairs. Jobs are being lost
every day. People who are able to keep their jobs are making less.
Incomes are actually shrinking in many sectors. You need to be able to
absorb this shrinkage if it happens to you. So, make some economical
concessions.

Try to spend no more than 50% of your net income. Put the extra money
into an easily accessible account. If you lose your income, you will
have something to fall back on. You should also consider your individual
circumstances. How slippery is your financial standing?

If there are talks of layoffs at work, you are not standing on solid
ground. If your home needs major repairs, you should not be buying a new
car. Be reasonable. Consider everything. One extra $50 payment every
month could push you over the edge. Take a good look around you.

How is your life? Most of the time people finance wants instead of
needs. If you want something, save up for it. If you really, really need
it and your financial standing is good, finance it. Remember; keep the
economy at the forefront of your personal debt decisions.

You have to consider more than your own actions before you accept more
debt. You have to realize that there may be circumstances beyond your
control that make it difficult for you to make ends meet.

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