8/22/2012 5:28 PM ET|
15 signs of serious debt trouble
Is your credit card spending is out of control? These warning signs can tell you if you need a financial counselor.
You know you need to seek help from a credit counselor when . . .
It may sound like a comedy-routine opener, but for lots of people, it's definitely not a laughing matter.
Many who are weighed down with debt opt first for self-help, trimming back on spending and keeping a close eye on accounts. But much like losing weight, some people have the willpower to shed a few pounds on their own, while others require the help of a personal trainer.
If you answer yes . . .
When do you need to call in a financial fitness expert? Here are 15 instances that could indicate that your balances are getting the better of you and that credit counseling might help.
15 signs of debt trouble
- Your credit card balances are rising while your income is decreasing.
- You are paying only the minimum amounts required on your accounts, or maybe even less than the minimums.
- You're juggling bills. For example, you apply for another credit card and use cash advances from it to pay an existing card.
- You have more credit cards than a successful gambler has poker chips.
- You are at or perilously near the limit on each of your credit cards.
- You consistently charge more each month than you make in payments.
- You are working overtime to keep up with your credit card payments.
- You don't know how much you owe and really don't want to find out.
- You have received phone calls or letters about delinquent bill payments.
- You are using your credit card to buy necessities like food or gasoline.
- You use credit cards not for the sake of convenience but because you don't have money.
- You are dipping into savings or your individual retirement account to pay your monthly bills.
- You are hiding the true cost of your purchases from your spouse.
- You're playing the card game by signing up for every credit card that sends you an unsolicited offer.
- You have just lost your job, or are fearful that you are about to, and are concerned about how you will pay all your bills.
Look for a pattern
There's no magic number of statements with which you must agree to determine if you have a credit problem. Even if you see yourself in several of these instances, you still might be able to deal with your credit crunch on your own.
But if you spot a trend, beware.
For example, don't panic if you occasionally shop surreptitiously, not letting the spouse in on your splurge. "Anybody might do this once or twice," says Debby Vinyard, the co-owner of Vinyard Financial Planning and Associates, in Marion, Ill. "But if it's becoming routine, you probably have a problem."
Similarly, paying the minimum balances once in a while could be acceptable. But if it's more than an isolated money-management misstep, you could be headed for trouble.
"If you see some of these warning signs, you need to take a serious look and find out why," Vinyard says. "Maybe it's something temporary. You're between jobs.
"But if it's becoming a bad pattern, you need to be honest. Admitting you have a problem will go at least halfway toward solving it."
Don't wait too long
Alan Olinger, the vice president of sales and marketing for Money Management International in Houston, says it's far easier on families to seek help sooner rather than later.
"The best time to seek credit counseling is before all the extreme warning signs crop up," Olinger says. "Generally, it's easier to work with someone heading down the path toward financial difficulties rather than someone that's already reached that destination."
- Calculator: Do you have too much debt?
Any trip to a credit counselor should be preceded by a thorough analysis of your family's personal finances: how much money you have saved, how much you owe, how much you have coming in each month and so on. Such an analysis will help you assess how much trouble you're in and how much help you need.
"For many of our clients, we mainly help them get organized," Olinger says. "This is something they can do for themselves if they don't need our support."
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Very good advice. Remember a few years ago it was not good to have more than a couple of charge cards? Now the creditors look at what we owe against what we can charge as a total. Have we heard "use debit cards" alas me matey. No recourse if there is a problem with our purchase. In the last two years alone we have had issues that were easily resolved because our credit card companies took back the money from the vendor and did not release payment until we were satisfied with the outcome. Main thing is charge what you can payoff, don't spend unless you have to, reward cards only pay if you pay off balances, Don't take a cash advance if you have room on your charge cards to pay for the transaction. Be diligent in transferring balances to a card that gives you at least one year interest free.
Good luck and good health to all.
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