When obtaining credit and therein creating debt, one must be responsible about how they go about doing it. It is all too easy to get caught up in the rat race known as consumer debt. However, how do you know if you have a problem? Take for instance; you have monthly payments of $400 to all of your creditors, plus a mortgage of $2000, and a home equity line of credit of another $400 from a new roof you put on the house. Your monthly bills, not including food and gas, etc. are now $2800. What if you are only bringing in $2000 – well you know that you are in trouble. But sometimes it is not that obvious, sometimes you are in debt and don’t even realize how much debt you have. Sit down and take a look at your financial picture, then see how these items apply to you:
1. Your debt-to-income ratio should be roughly 30% or less of your monthly income, not including your rent or mortgage.
2. You have missed payments on your accounts, or have accounts you just cannot pay.
3. All of your credit cards and loans are at their absolute maximum.
4. You have cash advance options on different credit cards that you take on a regular basis to pay other bills.
Any of these above warning signs could mean that you need to seek help. You need to start eliminating debt, and if you cannot figure out how to do it yourself, you can always seek advice from a credit counselor who can help. ■
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