Not sure if you have a debt problem and need debt management help? How many of these major debt warning signs apply to you?
Over the Limit Fees
Many credit cards charge fees for spending over your credit limit. This will make this month’s balance larger than last month’s. If all of your credit card balances are greater than 80 percent of your credit limits, consider this a danger signal.
Too Many Cards/Too Much Debt
As a general rule of thumb, you either have too many credit cards or you are carrying too much debt if it seems you cannot pay off your combined credit card debt within one year. When was the last time you had a zero balance on your credit cards?
Out of Money
Many people are using credit for small purchases such as gas and food. If you previously paid cash for these or other small items, but are now using credit, it could be a sign that there’s a problem.
High Debt-to-Income Ratio
Your debt-to-income ratio measures the amount of debt you have against your income. You can calculate this ratio by dividing your total monthly debt payment (excluding mortgage/rent) by your total monthly gross income (before taxes). For example, $500 in total monthly debt payments divided by $2,000 in monthly gross income results in a debt-to-income ratio of 25 percent. If you have a debt-to-income ratio near or over 20 percent, this is a sign that you may have a debt problem.
It’s a fact. Crises and emergency situations happen, and people sometimes are unable to pay for such things as emergency auto repairs or medical expenses because their credit cards are tapped or the majority of their earnings are applied toward debt repayments. It’s always important to keep an open line of credit available for such situations.