(1) How Much Debt Do You Have? Is It Reaching the Danger Zone? Here Are Key Red Flags to Watch For

How much debt do you have? Sometimes it is hard for us to admit and actions often speak louder than words. You may not admit to having too much debt, but are the air raid sirens of debt going off? Are the red flags of debt madly waving? When the debt sirens go off, we can all hear them because they are unmistakable. Don’t ignore them or be a victim of “magic thinking” that your debt issues will suddenly vanish; these are serious and real and will only grow with time and hurt you more than they do today. Those red flags are:
1. Credit cards and other accounts are past due–Everyone runs late on payments right? But lately, maybe all or most of your payments are late and perhaps you are not opening the bills to deal with it. But here’s the problem: if you pay your bills late, the credit card companies and the banks will put a black mark on your credit report if you payment is more than 30-days late. That black mark will stay on your credit report for seven years. If you have a lot of bills that you are paying late, that’s a lot of black markets that will pull down your credit score and increase the interest rates that lenders will charge you in the future.
2. You are borrowing from one credit card to pay another. If you are borrowing from one credit card to pay another, it is a juggling act that you can perform for awhile, but it will catch up to you and should serve as a red flag that you need to change what you are doing.
3. All of your credit cards are maxed out. Are all your credit cards maxed out? It is a major red flag that you are getting into debt seriously over your head and you need to reverse course. When the powers that be total up your credit score or FICO Score–a percentage of that score is the result of how much available credit you have and how much you are using. If you have $20,000 in available credit and you are using $19,500, that makes lenders nervous and they will charge you more interest on your future loans.
4. You are applying for new credit cards to pay old. If you are trying to get new credit cards to pay off the old maxed out ones, that too is being recorded on your credit report and should serve as a major red flag to reverse course.
5. You are ignoring your monthly statements or paying just some debts, but not all to keep it all going? This is a serious red flag and you need to face the music by reducing your spending wherever you can and develop a plan to pay off all of your debts and build credit.

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