Debt Management Consultants – Do you have a Serious Debt Problem?
It’s hard to know exactly when you have a serious debt problem, but we will look at some situations that will clue you in to the fact that you do have a problem. First if the amount you have to pay for monthly minimum credit card payment is greater than 15% of your take home pay you have a serious problem. Second if you are delinquent in your revolving accounts this is a sign of a serious problem. If you have maxed out all of your credit card limits, this is a sign of a serious problem.
If you have indeed maxed out all of your credit limits it lowers your credit score, and in turn will increase the interest rates if you go to refinance your mortgage. If you take advances to pay off your credit card, this is a sign you have a serious debt problem. Every time you take a cash advance from one of your credit card companies you are charged a fee and the interest rate is usually astronomical You are essentially shifting your debt from one credit card company to the next. The unfortunate thing is the cycle is very hard to break.
You want to avoid the debt snowball effect where you keep transferring your expenses to the future by opening new credit card accounts, and taking advances from them to pay off your old account. At some point the amount of accounts you have open will be unmanageable. At this point even a debt management consultant may struggle to get you back to a successful financial path.
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