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Is Your Debt at a Critical Level?


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Even if you've started to make headway reducing your debt, you need to be sure that it stays down. It's easy to lose focus of your debt management plan when you start to feel good about decreasing your debt. Consistency is the key to maintaining a low amount of debt, so continue to monitor your spending and expenses. If you're not sure your debt is at a reasonable level or not, here is some advice that might help.

The following are signs that you may be carrying too much debt:

- Inability to make minimum payments on credit cards.

- Frequently charged late fees and credit limit fees.

- Using credit cards, instead of cash, as a necessity.

- Carrying a debt-to-income ratio greater than 20%.

- Inability to contribute to a savings account or 401K retirement fund.

- Being denied for more credit.

- Maxed-out credit cards.

If you come to realize that you have a higher than normal debt load, don't fret, there are a number of things you can do get back on the financial track:

If you are in severe debt, paying it off should be made your number one priority. You may need to make sacrifices in order to get above water. This means cutting back on luxuries, outings, entertainment, and any other expenses that you can do without. Once you break free of the overbearing debt, you will be able to resume enjoying these types of amenities. Remember, there are many frugal alternatives to expensive luxuries and entertainment activities.

Make sure you get your payments in on time. Don't wait to pay bills on their due date, pay them as soon as you get them, if you can. Pay for living expenses first, starting with your mortgage or rent and basic utilities. Worry about credit cards and loans after you are sure that there will be a roof over you and your family's heads with heat and the lights on. You may not be able to physically pay for these living expenses first due to the bill schedule or your payment schedule, so make sure that you put aside the appropriate amount of money each pay period to cover these costs.

Once you are above water, stay there. Just because you have paid off your debts doesn't mean you can neglect paying your bills now. If you do that, you will end up right back where you started. Keep your spending and budgeting habits consistent, and be sure to contribute to a savings account so that you have an emergency back-up plan, in case anything happens.

ABOUT ACCC: American Consumer Credit Counseling (ACCC) is a non-profit 501 (c) (3) organization dedicated to empowering consumers to regain control of their lives through education, counseling and debt management. ACCC provides individuals with practical solutions for solving financial problems and recognizes that consumers’ financial difficulties are often not the result of poor spending habits, but more frequently from extenuating circumstances beyond their control. As one of the nation's leading providers of financial education and credit counseling services, ACCC works with consumers to help them with the best plan of action to reduce their debt and regain financial stability.

For more information or to access free financial education resources log on to .


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