Improving Your Debt with LeapFrog
When it comes to improving your debt, we understand it can feel like a tall order.
And in truth, it is.
When you have a lot of debt, it can feel like a full time job just keeping your head above water. That said, there’s always support available.
The first thing to understand is that you are not alone. The vast majority of US citizens have some form of debt they are dealing with. The key here is to understand exactly what you’re dealing with. As such, we’ve put together some steps to assist below.
Good and Bad Debt
The first concept to grasp is that it’s not a bad thing.
Well, at least not in certain cases. There are several responsible financial decisions that will lead to debt, but the overall outcome justifies it. This is usually the case when the investment directly leads to more value, like income or viable credentials.
*This can apply to homeownership, school loans, and more.
But don’t throw caution to the wind yet.
There is for sure such a thing as bad debt; this is the kind that complicates things moving forward. Anything that offers little to no return on the investment is likely a bad play.
Debt Vs Income
One juxtaposition that’s often cited by lenders is that of your debt and income.
Anything lower than that thirty percent debt puts you in a great position when it comes to lending. Once you start crossing the 40% threshold, though, you’ll be viewed as an unsafe bet to most evaluators.
Keep in mind that there are a great deal of factors at play in these evaluations.
It’s hard to guess exactly what factors a lender is focusing on in their estimates. But still, following these figures is a great start to improving your debt.
Managing Your Debts
One of the best ways to keep your debt in check is to divide your monthly income to fit your circumstances. There’s a fairly simple metric for this. First, take half of your monthly earnings and set them aside for your necessities.
Next, take a fifth of your income and commit to putting it away as savings. And last, we all know that one of the keys to life all around is balance. It never hurts to spoil yourself every now and then, so long as its a responsible endeavor. Use the last third of your earnings for these personal desires. And if you’ve followed the first two, you’ve certainly earned it.
That brings us to the close of this entry in our blog. But, we’ve only scratched the surface of improving your debt. Be sure to check back in here for more on the subject to come.
Have more questions on the banking side of things? LeapFrog Mortgage can help. Our staff of qualified experts are on hand to provide you with all the support you need. Contact one of our lenders today to learn more.