Your Money New York - Debt Overview

Debt Overview

"Debt" can be a frightening word, and that’s understandable. Used improperly, debt can create enormous problems for you and impair your long term financial health. Used properly, however, debt enables you to buy something of lasting value now - such as a college education or a home - and pay for it later.

When you borrow for something that you expect will rise in value, and the monthly payment to pay off the debt fits within your budget, then taking on debt might make sense. This is using debt in a way that could help increase your net worth. Very often, people run into problems when they start relying on debt to meet day to day expenses - using debt for convenience or to meet costs that they could not otherwise afford. This has been especially true as costs of our most basic needs- gas, groceries, and clothing -- have grown faster than many incomes. It can be surprising how quickly debt levels can grow -- especially once interest charges and other fees are added to the balance.

Unfortunately, many individuals and families now find themselves in an unsustainable debt situation. After years of piling on debt, interest rates are rising. At the same time, many people are having their hours cut back, or have lost their job and can no longer meet the monthly debt payments. In some cases, they owe more money than they make, and they are taking on new debt to pay off old debts. This type of unsustainable borrowing only makes their situation worse.

So how do you break this cycle? What resources are out there that can help New Yorkers better manage debt? What can you do if your debt situation becomes too unbearable? The Federal Trade Commission provides helpful information about steps you can take to get out of debt, including how to find a credit counselor, and when to consider bankruptcy.

In this section of Your Money New York, we’ve put together resources to help you:

Next: Get Out of Debt Safely

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Debt Overview