In a credit crunch? You may need
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
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
7. You are working overtime to keep up with your credit
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
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
13. You are hiding the true cost of your purchases from
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 Money
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
"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."
-- Posted: Jan. 9, 2003