Seven Signs of a Debt Problem:

Are you in control of your credit card debt – or is your credit card debt controlling you?

Although I often encourage my readers to avoid using credit cards altogether and to try for a zero balance on any credit cards they do have, I also understand that some people use credit cards.  There are lots of reasons people use them – some folks earn rewards like airline miles for using their cards.  Others keep credit cards on hand for emergencies or large purchases.

In some cases, these people use their credit cards responsibly (or at least as responsibly as you can use a credit card).  They pay off their balances – in full – every month, and they never use their cards for impulse purchases or treat them like a second or third source of income.  There are other people, though, who can’t seem to get a handle on their credit cards.  These are the folks that are constantly overwhelmed by their debt; they’re carrying huge balances and locked in destructive habits – and some of them might not even realize it.

If you know what to look for, it’s actually pretty easy to figure out if you’re setting yourself up for a potential credit card disaster.  Here are seven warning signs that you may have a debt problem:

1. You think about your debt constantly.  If you have trouble sleeping at night, or if you live in perpetual fear of receiving your next credit card statement in the mail, that’s a good sign that you might have a problem.  If your debt is a constant source of anxiety, there’s a good chance that your credit card use is way out of hand.

2. You have to get “creative” with your payments.  For example, using one credit card/cash advance to pay another credit card, or making a late payment (or no payment at all) on one card in order to pay another.  If you can’t actually afford to pay all that you owe each month, there’s definitely something wrong.

3. You’re using your credit card(s) for everyday purchases. If you’re charging things like, say, groceries or gasoline, you might have a debt problem.  Sure, some people prefer to use their cards to get rewards points or cash back or whatever (again, I don’t agree with this, but I know it happens).  And I suppose if you can – and do – pay your balance in full at the end of every month that’s fine.  But in most cases, charging essentials like this is a sign that you can’t pay cash for those things.

And if you can’t pay cash for groceries and gas, how are you going to pay off your credit cards?  This leads to the next warning sign . . .

4. Treating your credit card(s) like additional sources of income.  Credit cards are not income.  They shouldn’t be treated like income.  Your available credit should not be thought of as “extra money.”  Period.   Your monthly household income is the amount of money that you (and anyone else in your household) actually make.  If you make $2,000 a month, your monthly income is $2,000 – not $2,000 plus the $500 you have available on your credit card.

5. You’re constantly checking your available credit.  If you find that you’re calling or logging on to your credit card account to check how much you can spend – take notice.  That’s a huge red flag, especially if you’re checking because you’re about to charge something.  Another huge red flag?  Requesting an increased spending limit after you learn that card is nearly maxed out.

6. You’re stuck in the “minimum payment trap.”  If you usually only make your minimum credit card payments, you’re setting yourself up to be in debt for a very long time.  If you’ve got a large credit card balance, you should re-think your payment strategy.  Sit down with your monthly budget and figure out how much you can afford to pay on your credit card each month – even if you can only pay $20 or $30 over the minimum, it’s worth it.  You’ll get out of debt faster, and you’ll save tons of money in high-interest finance charges.

7. You’re procrastinating.  In many cases, people know deep down that they’re getting overwhelmed by their credit card debt – but they don’t do anything about it.  The truth is, your debt situation isn’t going to improve unless you take action.  If you’re having trouble making your payments, call your lender and see if they’re willing to work with you.  If you’ve tried working with your lender and you’re still struggling, consider credit counseling to help you get your finances in order.  Don’t give up, and don’t ignore the situation.