Flags to Indentify Mounting Credit Card Debt

by DebtGuy 31. July 2009 08:13

Managing credit card debt can be tricky, if not downright impossible if left unchecked.  There are simple questions you can ask yourself to identify if you are heading in the wrong direction, or if you need to take corrective action.

  1. How much have you saved in your rainy day fund?

    Maybe the first question to ask is if you even have an emergency fund.  Many people find they enter the downward spiral of debt, not by living the excess lifestyle, but because they did not have rainy day fund when their financial skies were clear.  All it takes is one unexpected expense, whether that be a medical emergency, loss of job, etc, and you could be stuck in a financial hurricane.  Fortunately, as you emerge from debt, you can include a "personal rainy day bill" in your budget.
  2. Are you spending more than you are paying?

    This should go without saying, but if you are consistently spending more than you are able to pay off, you have a problem.  There is an old saying that it is easy to spoon away money faster than it is to shovel it in.  If you find yourself in a financial mess, with unsecured debt piling up, take a few minutes and speak with one of our credit counselors to see how we can make a customized plan to help you get out of debt.
  3. Are you living day to day because of your credit card or special terms financing?

    Sure it is nice to have the monster, in-home movie theater, closet full of designer clothes, and other nice things that your friends and neighbors have, but if you don't have the means to pay for it, you are certainly headed for trouble.  Use special caution when signing up for "bargains" like zero percent interest for X months.  If you choose to utilize one of these promotions, divide the total balance by the number of months of the terms, and decide if you can make that payment (not the minimum payment the store advertises).  If you are unable to pay the bill calculated with this method, you will most likely be suprised with an overnight increase of the balance of 20-30% when the terms expire.  That $5000 deal could easily become a $6500 deal breaker, with an APR approaching 30%.
  4. What is your financial plan to get out of debt?

    If you fail to plan, you plan to fail.  Did you know that if you are making minimum payments, you could be paying off that balance over a period of 20+ years?  AmeriFree can help you come up with a financial plan that will enable you to be debt free in 24-60 months.
  5. Do you charge your day to day purchases on a credit card, rather than a debit card?

    If you use the available credit on your credit card, rather than paying with a debit card due to lack of funds in your checking account, this is a strong indication you are heading in the wrong direction.
  6. Are you floating bills, or altogether skipping payments?

    If you find yourself in a situation where you are playing a sliding tile puzzle game with your cashflow, you certainly have problems with debt
  7. Are you behind on your credit card bills?

    Being late on a credit card payment causes your previously small minimum payment to snowball into a much larger minimum payment.  It also causes your credit card interest to go up dramatically, and will cause the creditor to scrutinize your account.
  8. Are you on a first name basis with those seeking to collect debts from you?

    Although it may begin as a casual follow up to your delinquent account, collection departments and agencies will quickly ratchet up the pressure to get paid.  Our debt solutions offer relief from the incessant calls, harrasing communications, and relentless pressure used by collection agencies.

After taking this quiz, you now have a better idea where you rank on the financial freedom barometer, and can forecast what lies ahead.  Fortunately we offer a free consultation to go over your monthly budget, unsecured debts, and living expenses to come up with a plan that can help you be debt free must faster than making token monthly payments.

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Financial Education

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