Sense & Centsibility Blog

Worried About Your Debts? Top 4 Signs You May Need to Be.

credit card stress

Do you worry about the level of your debt? Do you feel like you have been paying on credit cards forever and haven’t made any progress? Do you pay all your bills on time or do some go late or get put off until the next month?

If this sounds like you, you are not alone. According to the 2012 Consumer Financial Literacy Survey conducted by the National Foundation for Credit Counseling (NFCC) the proportion of adults who do not pay all of their bills on time has increased from 28% in 2011 to 33% in 2012 – that is, fully one-third of U.S. adults, or more than 77 million Americans, do not pay all of their bills on time.  

One of the most common statements I hear from clients who are in trouble with their credit cards is “I was doing okay until…” Whether that “until” moment was – a job-loss, illness, reduction in income, and/or separation or divorce – what we usually find after many questions is that “okay” typically means the client had the same amount of debt, but was able to maintain minimum payments so didn’t feel the pain as much. What are the signs that you may need to be concerned about your debts?

Playing Musical Bills 

musical chairs

Remember the childhood game of musical chairs? “Musical bills” is very similar. Playing musical bills means there is consistently not enough money to cover all the bills so some go unpaid until the next month, or savings is neglected because the money is needed for bills. In fact, credit card payments may take up so much of the monthly income there is not enough left to cover all the basics or plan for periodic expenses like trips, car repairs, holidays, birthdays, clothes shopping, etc...If you are skipping energy, cell phone, or water bills to pay for credit cards it may not affect your credit immediately, but if you fall too far behind you may end up with collection accounts which will affect your credit drastically.

Credit cards as income 

credit cards

If you are playing “musical bills” you may also be caught in the trap of using your credit cards as “income.” This isn’t the same as using credit cards for gas and groceries in order to build points, then paying it off at the end of the month. No. This is when there is no “choice” but to use credit cards to pay for gas and groceries because all the household cash has gone to servicing the minimum payments on those credit cards. This can happen with any amount of credit card debt if there is not enough income to cover all household expenses. Maybe you started off using your credit card to pay your cell phone bill for convenience, but now you are at the point where you carry a balance on the card each month, which is making everything – including that cell phone – more expensive because you are paying 29.99% more for it thanks to interest.  This is a terribly difficult trap to get out of.

Paying only minimum payments

Have you looked at that new box on your credit card statements? You know, the one that tells you it will take 13 years to pay off your $1100 balance if you only pay the minimum?  If you haven’t seen this there is an example below. Now, go look at your credit card statements. How long will it take you to pay off your balances if you are only paying minimum payments? How much will it cost you in interest to only pay the minimum payment?  If you are consistently only paying minimums on all of your cards because that is all you can afford, it is a sign you may be in trouble. 

Using debt to pay debt (or bills)

Have you ever refinanced your house and paid off your cards with some of the refinance money? Or taken out a Home Equity Line of Credit or 401k loan to pay off credit cards? Did the cards stay paid off or did the balances slowly build again? If you fall into the category of folks whose balances rose again – and there are plenty of people who fall into this category – you may need to consider your relationship with credit. For some people an open credit line means nothing but temptation. Using debt to pay off debt rarely puts you ahead and it is a warning sign that you may be in over your head. When faced with a financial emergency or situation and your go-to solution is always to borrow money, you are creating a cycle that is difficult to end…and often ends in bankruptcy.

Don’t know how much you owe 

stack of credit cards

If you have more than a couple credit cards it’s not only difficult to remember all the different due dates, it is also very easy to lose track of how much you owe.  Sometimes it’s too scary to know the full amount you owe.  What could be even scarier, though, is not knowing how much you owe. Too often I meet with people who have no idea how much they owe and are shocked when we total everything up. This is usually because they have so many small accounts they didn’t realize that once they were all maxed out they would add up to some enormous number.  Other times they didn’t know because they knew it was big, they were just too scared or overwhelmed to really look. Sit down, make a list of who you owe and how much you owe. Is the number higher than you thought it would be?

Get help before it’s too late

As one of my fellow bloggers stated, “When you are in a hole the first thing you need to do is stop digging.”  If you are feeling out of control with your debt LSS Financial Counselors can help you make a plan to take control and get rid of that debt! Call us at 888.577.2227 or visit and make your appointment today. It’s that easy.

Author Shannon Doyle is a certified financial counselor at LSS.