Take Your Debt Temperature
by Ellise Walsh

One thing our culture has become proficient at is developing measurement systems. We have precise measurements of health, like the thermometer to take our temperature, and other medical tools so we always know in precise terms how our body is doing. We measure the weather, our vehicles, the economy, just about anything we can measure, we measure it. Measurement gives us control over decay or change and gives us the signals we need to make changes before things go too badly wrong.

In the same way, we should have in place ways to measure our level of debt. If you can get that same feel for whether your debt level is acceptable or beginning to become a problem, then you can take appropriate measures to get it in balance with the rest of your budget. Below we will present a questionnaire for you to review. You are familiar with this format. If you answer yes to more than a quarter of the questions, it is time to think about taking more aggressive action to resolve your debt. Moreover, the questions themselves will give you some feel for areas for you to address. So let’s get started.

1. What is the level of your savings and are you adding to it regularly?

2. Do you sometimes have to use your credit cards to pay for necessities?

3. Is the percentage of your total cash flow that goes to debt increasing?

4. Do you have more than three credit cards or credit resources other than car or home?

5. Are the credit balances on your credit cards going up each month?

6. Are you maxed out (or close to it) on your credit limits?

7. Do you ever pay bills counting on the mailing time to cover when you will get the money in?

8. Do you have to use a calculator, spreadsheet or go check to know how much you owe on your credit cards?

9. Do you use high price cash advance services to pay off your credit cards sometimes?

10. Have you recently had a credit card declined because you were over the credit limit?

11. Do you know your credit rating?

12. Have you been declined for credit because of your high credit balances?

13. Have you overdrawn your checking account in the last three months?

14. Do you have debt collectors contacting you about your balances?

15. Do you make only the minimum payments on credit card debts?

16. Do you keep the level of debt a secret from your family so they won’t worry?

17. Do you feel like you will never catch up?

18. Do you have a plan for getting out of debt?

19. Would one more big bill like a medical emergency put your budget under?

20. At this rate, would the time to pay off your debts be more than two years?

These are pretty tough questions and if you found yourself answering yes to the majority of them, then you know now that you have a credit problem. But believe it or not, recognizing the problem is the biggest step for getting a solution in place. Now that you have gone through the thought process, there are a number of steps you can take to get the problem under control.

• Go and get all of your statements and review them, make a list or a spreadsheet of your balances, minimum payments and due dates

• Get a calendar and mark it up with all the credit card due dates. Put that up somewhere so you are aware of them before they come due. Often times we let credit card due dates go by because we are avoiding the problem. Then you end up paying late fees and that hurts your credit rating even more

• Order a credit report. The big three credit reporting agencies are Experian, Trans Union and Equifax. You can go to their web sites to order the report. It isn’t very expensive and it will give you an idea where you stand. I know that isn’t a pleasant prospect but as we talked about earlier, knowing where you are is the first step to repairing your credit and getting out of debt

• Now the really hard part. Sit down with your spouse and discuss the problem. Prepare a report using your online software or spreadsheet or just with a tablet and lay it all out where you are. Discuss budget cutbacks or additional work you can do to get the situation turned around

When you are done with these steps, you will feel much more like you have control of your budget again.

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