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Know and avoid the common types of consumer debt

There are many different types of debt that can eat away at your finances. At the Ammerman & Goldberg “Bankruptcy” Law Office, we know how even just a few missed payments can adversely affect your credit. To get a handle on your finances, you should know what some of the most common types of debt are and how to avoid them.

According to The Center for Microeconomic Data, housing-related debt is one of the biggest issues people faced in the last quarter of 2015. The balances of mortgages alone totaled roughly $8.25 trillion. While holding a mortgage can actually be a good thing for your credit score, it is only beneficial if you make those payments on time and in full. At the first sign that you might have difficulty making a payment, you should contact your lender to determine a way to remain in good standing on the loan.

Another common debt that people in Washington, D.C., have is credit card debt. It can be easy to charge everyday items to a card because you do not actually see the money leaving your account. However, using your credit wisely is key to protecting your finances. Experts recommend paying balances in full every month. The balance on a card should be kept to 30 percent or less of the credit limit.

Lastly, medical bills can quickly deplete your funds. In many situations, the provider will work with you to develop a plan to pay off the bill. Let them know what reasonable payment you can make every month. You may need to budget your spending to prioritize paying off that bill instead of putting more money in a savings account.

There are professionals dedicated to helping people with financial problems such as these types of debt. For more information regarding how to handle these issues, please visit our page offering tips for debt relief.

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