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How to Survive 10 Financial Horrors
What’s scary about Halloween? How much we’re willing to pay for one day of the year. Americans spent a record $9 billion last Halloween and are expected to do the same this year. [1]
All the ghouls, goblins, ghosts and spooky creatures make October the time for fears and frights. But some horrors follow us year-round – like terrifying financial nightmares that will make you sleep with one eye open.
Is there a financial boogeyman haunting you? Here are 10 financial horrors, and how to conquer them...
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1. Financial Horror No. 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:
- Consolidate federal student loan debt.
- Settle with private lenders.
Learn more at Student Loan Debt Consolidation.
Dmytro Vietrov/Shutterstock/Kelsey Bell
2. Financial Horror No. 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 # 1 complaint
30 million Americans have at least one debt in collections
Average amount in collection = $1,000
How to survive:
- Find the right debt relief option – consolidation, settlement, etc.
- Stop collection calls and file suit for harassment.
Learn more at Fair Debt Collection Practices Act.
ArtFamily/Shutterstock/Kelsey Bell
3. Financial Horror No. 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 # of credit cards: 3
Average interest rate available: 17.07 %
How to survive:
- Take out a personal debt consolidation loan.
- Pay off your debt at a much lower interest rate.
iofoto/Shutterstock/Kelsey Bell
4. Financial Horror No. 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:
- Correct your credit report to ensure it is error-free.
- Use credit monitoring as you build your credit score.
Learn more at Get the Credit Score You've Always Wanted.
Elnur/Shutterstock/Kelsey Bell
5. Financial Horror No. 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:
- Find a state licensed tax attorney.
- Explore options for tax debt relief - OIC, CNC, installment agreement.
Learn more at Finding the Best Tax Debt Relief Solution.
Nomad_Soul/Shutterstock/Kelsey Bell
6. Financial Horror No. 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:
- Call a credit counselor to find solutions.
- If no path is open, declare bankruptcy – it’s not the end of the world!
Axel Bueckert/Shutterstock/Kelsey Bell
7. Financial Horror No. 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 # 1 reason why Americans go bankrupt
Nearly 43 million Americans have medical debt
How to survive:
- Review your policies to identify coverage gaps.
- Create a budget that allocates savings for emergencies, like a trip to the ER.
Melinda Nagy/Shutterstock/Kelsey Bell
8. Financial Horror No. 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%)
How to survive:
- Take strategic action to build your credit score.
- Use comprehensive credit restoration before loan applications.
ArtFamily/Shutterstock/Kelsey Bell
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 % loan
How to survive:
- Use debt consolidation to reduce debt-to-income (DTI) ratio.
- Budget your money to save for a higher down payment.
- Build your credit score with credit monitoring.
Luis Molinero/Shutterstock/Kelsey Bell
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:
- Review your credit reports to identify potential fraud.
- 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.
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