How to Survive 10 Financial Horrors

1. Running from a boulder of student loan debt

What it means: You’re graduating from college and face a massive student loan tab you have to pay back.

No wonder you’re worried:

44 million student loan borrowers who owe a collective $1.5 trillion

The average student loan debt per borrower = $39,400

How to survive:

1. Consolidate federal student loan debt.
2. Settle with private lenders.

Learn more at Student Loan Debt Consolidation.

2. Zombie debt collectors

What it means: Your debts are like the living dead. They keep coming back no matter what you do.

No wonder you’re worried:

Debt collection is CFPB’s No. 1 complaint

30 million Americans have at least one debt in collections

Average amount in collection = $1,000

How to survive:

1. Find the right debt relief option – consolidation, settlement, etc.
2. Stop collection calls and file suit for harassment.

Learn more at Fair Debt Collection Practices Act. 

3. Falling off a corporate high-rise

What it means: You’re losing a battle with credit card debt and you feel like your financial life is in jeopardy.

No wonder you’re worried:

Average balance on credit cards = $6,354

Average number of credit cards: 3

Average interest rate available: 17.07 percent

How to survive:

1. Take out a personal debt consolidation loan.
2. Pay off your debt at a much lower interest rate.

4. Teeth fall out during a loan application

What it means: Your credit score isn’t good enough so you’ll be judged and rejected by your creditors.

No wonder you’re worried:

Average FICO score = 695 (700 or better is good)

1 in 5 credit reports contain a damaging error

How to survive:

1. Correct your credit report to ensure it is error-free.
2. Use credit monitoring as you build your credit score.

Learn more at Get the Credit Score You've Always Wanted. 

5. Armageddon in April

What it means: You’re worried about owing money to the IRS and being unable to pay your income taxes.

No wonder you’re worried:

An extension doesn’t stop interest charges

Net tax gap for the IRS= $458 billion - $52 billion in late payments

How to survive:

1. Find a state licensed tax attorney.
2. Explore options for tax debt relief - OIC, CNC, installment agreement.

Learn more at Finding the Best Tax Debt Relief Solution. 

6. Trapped under a paper mountain

What it means: You have too many debts, too many bills and no way to escape – you’re suffocating.

No wonder you’re worried:

U.S. consumers owe $3.9 trillion, in total

796,037 people went bankrupt in 2017 alone

How to survive:

1. Call a credit counselor to find solutions.
2. If no path is open, declare bankruptcy – it’s not the end of the world!

7. Bleeding out from monetary paper cuts

What it means: You aren’t prepared for medical debt and even small issues are killing your budget.

No wonder you’re worried:  

Medical debt is the No. 1 reason why Americans go bankrupt

Nearly 43 million Americans have medical debt

How to survive:

1. Review your policies to identify coverage gaps.
2. Create a budget that allocates savings for emergencies, like a trip to the ER.

8. You call the bank, but no one answers

What it means: You aren’t good enough to qualify for credit – you aren’t creditworthy, so you’re ignored.

No wonder you’re worried:

You’ll need at least a 580 credit score to qualify for an FHA loan with the lowest down payment (3.5 percent)

How to survive:

1. Take strategic action to build your credit score.
2. Use comprehensive credit restoration before loan applications.

9. Financial Horror No. 9: Partner leaves you for the landlord

What it means: You’re not ready to buy a home, so your significant other will find stability elsewhere.

No wonder you’re worried:

The median price for a home in the U.S. is now $275,000

You’ll need at least a 580 credit score or higher to get approved for a 3.5 percent loan

How to survive:

1. Use debt consolidation to reduce debt-to-income (DTI) ratio.
2. Budget your money to save for a higher down payment.
3. Build your credit score with credit monitoring.

10. Financial Horror No. 10: Doppelganger takes over your life

What it means: You’re scared your information and data will be stolen and you’ll become a victim of ID theft.

No wonder you’re worried:  

16.7 million people were victims of identity theft in 2017

Financial losses for ID theft totaled $16.8 billion

How to survive:

1. Review your credit reports to identify potential fraud.
2. Use credit monitoring to set up fraud alerts.

Learn more at How to Prevent Identity Theft. 

Illustrations by Kelsey Bell. This article by Joe Pye was originally published on Debt.com.