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Warning signs of too much debt

Are you in debt trouble? There are several warning signs that can help you learn when debt can become an issue. Read each item to learn the warning signs.

    • You’re always late in paying your bills.
    • It takes you 60 or even 90 days to cover bills you once could pay monthly.
    • You juggle payments to keep creditors satisfied.
    • Your checking account is frequently overdrawn.
    • You can make only minimum payments on your credit cards.
    • You don’t have a savings account, or you have stopped making deposits to it.
    • You race to deposit your paycheck because you’ve already written checks that require the money in your paycheck.
    • A small reduction in your income or an unusual expense would make you unable to pay all of your monthly bills.
    • Your credit accounts are usually at their maximum limits.
    • You apply for more credit cards because you have reached the limit on the ones you have.
    • You are spending more than 20% of your take-home pay on credit payments (not counting your rent or mortgage).
    • Your loan or credit card balances stay the same or go up each month.
    • You ignore the telephone or mail to avoid dealing with creditors.
    • You’re still paying off purchases you made a year ago.
    • You put off medical and dental visits because you cannot pay the bill.
    • You sometimes wonder why you made certain purchases.
    • You feel free to spend more after clearing up a debt.
    • You use savings or credit cards to cover everyday living expenses, such as groceries.
    • You are always worried about your debts.
    • You argue with your spouse or partner over bills.

    tips for dealing with debt

    If you need help managing your debt, here are some tips.

    • Many nonprofit debt counseling centers across the country will help you deal with debt for a low fee or at no charge.
    • Some lenders will recommend that you contact debt counselors.
    • Contact a customer service representative at your lender to find out with whom you can talk.

    Make a list of all your bills and their amounts. Figure out when each bill can be paid.

    Contact your credit card company or other creditors to try to get your rate lowered or a different payment plan worked out.

    Make more than the minimum monthly payment on credit cards. This can help lower the amount of interest you pay and reduce or get rid of your debt sooner.

    Stop using your credit cards. Say no to offers for credit cards, debt consolidation, and second mortgages. Cash advances can be trouble! Only get a cash advance when it is absolutely necessary. The interest rate for cash advances is often higher than the interest rate for purchases. Plus, you are usually charged, and the rates are put into effect immediately, without a thirty-day grace period. Most banks also charge a fee based on how much cash you’re withdrawing in a cash advance. The same applies to personalized “checks” some credit card companies may send you.

    Be aware of credit card rates and fees. Educate yourself about the annual fees, current interest rates, finance charges, cash-advance fees, and any other fees tied to your card. This knowledge can help you make better decisions about which card to use and how to manage your card.

    Transfer balances to cards with lower interest rates. Consider finding credit cards that offer a low introductory rate (usually for six months), and transfer the balance from your previous credit card to that credit card. Before you take this step make sure that the new card offers the same (or lower) interest rate as your current card when the introductory rate expires. Most banks charge a fee for balance transfers, so you should take that into account as well. Be sure you understand the terms of the balance transfer, repayment requirements and associated fees.

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    DON’T GIVE UP

    Dealing with debt is hard, but keep trying. It’s one of the most important things you can do for a better financial future. Create a spending plan to help you manage your money.

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