If You Have More Than $10K in Debt, Make These 5 Moves (2024)

FAQs

What is the 50 30 20 rule for debt? ›

Our 50/30/20 calculator divides your take-home income into suggested spending in three categories: 50% of net pay for needs, 30% for wants and 20% for savings and debt repayment. Find out how this budgeting approach applies to your money.

1% of the balance plus interest: It would take 29.5 years or 354 months to pay off $10,000 in credit card debt making only minimum payments. You would pay a total of $19,332.21 in interest over that period.

Get out of debt in as little as six months with low monthly payments. You can pay off $5,000 in credit card debt by transferring it to a loan or balance transfer card, by paying off balances one by one or by making minimum payments.

In the golden rule, a budget deficit and an increase in public debt is allowed if and only if the public debt is used to finance public investment.

60/40. Allocate 60% of your income for fixed expenses like your rent or mortgage and 40% for variable expenses like groceries, entertainment and travel. 30/30/40.

There's no specific definition of “a lot of debt” — $10,000 might be a high amount of debt to one person, for example, but a very manageable debt for someone else. Calculating your debt-to-income (DTI) ratio gives you a rough idea.

To pay off $40,000 in credit card debt within 36 months, you will need to pay $1,449 per month, assuming an APR of 18%. You would incur $12,154 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.

Seek Credit Counseling

A counselor might suggest you enroll in a debt management program. They would work with creditors to reduce your interest rates and pay off credit card and other debts in three to five years. It's one thing to get out of debt. It's another to stay there.

What is the minimum debt you can be sued for? ›

Conclusion. While the specific minimum amount a debt collection agency will sue for varies, it generally falls around $500 to $1,000. Agencies consider the economic viability of litigation, state laws, and the debtor's financial situation when making this decision.

Creditors might start debt collection.

You could even be sued for repayment. If the company wins, it might be able to garnish your wages or put a lien on your home.

Solution 1: Debt Consolidation Loan

Consolidation loans allow you to stop high interest from piling up on your debts by paying them all off as soon as possible. Then, you only have to worry about the consolidation loan's interest rate, which is usually much lower than what you had been dealing with before.

To pay off debt fast, you need to exceed your minimum payments every month. Target the debt with the highest interest rate, also known as the "avalanche method." Lower your interest rate by requesting a lower APR from your card provider or consolidate debt.

Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500. 20% to savings and debt repayment = $1,000. 30% for wants and discretionary spending = $1,500.

50% of your net income should go towards living expenses and essentials (Needs), 20% of your net income should go towards debt reduction and savings (Debt Reduction and Savings), and 30% of your net income should go towards discretionary spending (Wants).

Is the 50/30/20 budget rule right for you? The 50/30/20 rule can be a good budgeting method for some, but it may not work for your unique monthly expenses. Depending on your income and where you live, earmarking 50% of your income for your needs may not be enough.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.