Use the following self-test periodically to determine whether you have too much debt.
| Yes | No | ||
| 1. | Are you using your credit cards or borrowing to pay for items you once paid for with cash? | ||
| 2. | Are you paying more to service your debts today than previously? | ||
| 3. | Are you paying your bills with money you saved for another use? | ||
| 4. | Are you using your savings to pay bills? | ||
| 5. | Are you dipping into your emergency fund to cover monthly expenses? | ||
| 6. | Are you only paying the minimum balance due on your charge accounts each month? | ||
| 7. | Are you extending repayment schedules — paying in 60 or 90 days bills instead of 30? | ||
| 8. | Have you maxed out or are you close to maxing out your credit cards? | ||
| 9. | Are you taking out new loans before old ones are paid off? | ||
| 10. | Are you unsure about how much you owe? | ||
| 11. | Are you usually late in paying bills? | ||
| 12. | Are you in danger of having financial or legal action taken against you? |
Add up all the “Yes” answers and use the table below to assess your debt risk.
| "Yes" answers | You are | You should |
|---|---|---|
| None | Managing credit well. | You should continue practicing good money management. |
| 1-5 | Getting out of control. | Stop using credit until current debt balances are paid. |
| 6-10 | On the verge of trouble. | Stop using credit. Develop a budget and debt repayment plan. |
| 11 or 12 | In serious trouble. | Consult a financial planning professional now, before your financial goals become impossible to achieve. |