In a credit crunch? You may need professional help
You know you need to seek help
from a credit counselor when ...
It may sound like a comedy routine opener, but for
lots of people it's definitely not a laughing matter.
Many who are weighed down with debt opt first for
self-help, trimming back on spending and keeping a close eye on
accounts. But much like losing weight, some people have the willpower
to shed a few pounds on their own while others require the help
of a personal trainer.
When do you need to call in a financial fitness expert?
Here are 15 instances that could indicate that your balances are
getting the better of you and that credit counseling might help:
1. Your credit card balances are rising while
your income is decreasing.
2. You are only paying the minimum amounts
required on your accounts, or maybe even less than the minimums.
3. You're juggling bills. For example, you
apply for another credit card and use cash advances from it to
pay an existing card.
4. You have more credit cards than a successful
gambler has poker chips.
5. You are at or perilously near the limit
on each of your credit cards.
6. You consistently charge more each month
than you make in payments.
7. You are working overtime to keep up with
your credit card payments.
8. You don't know how much you owe and really
don't want to find out.
9. You have received phone calls or letters
about delinquent bill payments.
10. You are using your credit card to buy
necessities like food or gasoline.
11. Your credit cards are no longer used
for the sake of convenience, but because you don't have money.
12. You are dipping into savings or your
IRA to pay your monthly bills.
13. You are hiding the true cost of your
purchases from your spouse.
14. You're playing the card game by signing
up for every credit card that sends you an unsolicited offer.
15. You have just lost your job, or
are fearful that you are about to, and are concerned about how
you will pay all your bills.
Look for a pattern
There's no magic number of statements with which you must
agree to determine if you have a credit problem. Even if you see
yourself in several of these instances, you still might be able
to deal with your credit crunch on your own.
But if you spot a trend, beware.
For example, don't panic if you occasionally shop
surreptitiously, not letting the spouse in on your splurge. "Anybody
might do this once or twice," says Debby Vinyard, co-owner
of Vinyard Financial Planning and Associates, in Marion, Ill. "But
if it's becoming routine, you probably have a problem."
Similarly, paying of minimum balances once in a while
could be acceptable. But if it's more than an isolated money management
misstep, you could be headed for trouble.
"If you see some of these warning signs, you
need to take a serious look and find out why," Vinyard says.
"Maybe it's something temporary. You're between jobs.
"But if it's becoming a bad pattern, you need
to be honest. Admitting you have a problem will go at least halfway
toward solving it."
Don't wait too long
Alan Olinger, vice president of sales and marketing for
Management International in Houston, says it's far easier on
families to seek help sooner rather than later.
"The best time to seek credit counseling is before
all the extreme warning signs crop up," Olinger says. "Generally,
it's easier to work with someone heading down the path toward financial
difficulties rather than someone that's already reached that destination."
Any trip to a credit counselor should be preceded
by a thorough analysis of your family's personal finances: how much
money you have saved, how much you owe, how much you have coming
in each month, and so on. Such an analysis will help you assess
how much trouble you're in and how much help you need.
"For many of our clients, we mainly help them
get organized," Olinger says. "This is something they
can do for themselves if they don't need our support."