Are You in Debt Trouble? Are You Sure?

A lot of people, when asked if they're in debt trouble, say they've got it under control. Under control probably means they're able to make the minimum payments on their credit cards and loans. But that isn't enough.

If you're just making the minimum payments on your debt, you *are* in trouble. If you do the math, you will realize that it takes decades to pay off most credit cards if you only make the minimum payments.

The credit card companies design it that way specifically. They're not worried about whether or not you get into debt trouble. They just want to make as much money as they can by charging you interest on your loan. And they want that to go on as long as possible, because it's completely passive income for them. They do nothing while you work your butt off to try and make the payments.

You can end up paying ten times the original purchase price of something, if you just make minimum payments.

If you're at all nervous about the amount of debt you have on credit cards, personal loans, car loans, etc., your instincts are probably telling you something. Even if you won't admit it, your instincts may already know you're in debt trouble.

Here's a test:

Would you be able to continue to make your credit card and loan payments if you lost your job tomorrow?

What if you couldn't find a new job for several months? Would you still be OK?

Aside from car loans, home loans, and student loans, could you pay off everything you owe right this minute if you had to?

If you answered no to any of those questions, chances are you are in debt trouble. You need to take action now to pay down your debt.

Don't be vague about it. Write down specific goals. That's how people succeed.

Instead of just thinking, "I'm going to pay a little extra on my credit cards each month" or "I'll make double payments on that loan," write down exactly what you plan to do and when you plan to be out of debt.

Example:

1. I will pay off my highest interest rate credit card first by sending in an extra $100 a month.
2. Once that's paid off, I will pay off my second highest rate credit card by sending in an extra $100 a month, etc. etc.
3. I will not make any more charges on my credit cards, no matter what, even if it means getting a second job to make ends meet.
4. I will be debt free by May of 2010.

These are examples of specific goals that can help you get out of debt trouble. Of course, you will need to modify these goals so they pertain to you and your circumstances, but that list should give you an idea of how to get started writing down specific goals.

Once you've made it, make sure you post that list somewhere you see it every day, such as on the refrigerator or by your computer monitor.

If you are married, make sure your spouse is onboard with your goals to get rid of your debt trouble.

Remember, just because you can make the minimum payments on all your credit cards and loans, doesn't mean everything is OK.

As I mentioned, you will be paying off your credit card debt for the rest of your life if you only make the minimum payments. Also, as long as you are in the habit of using those credit cards, you will be in the habit of acquiring more and more debt. If you don't feel as if you're in serious debt trouble now, you will certainly be there eventually if you don't make changes.

Debt is cumulative, and charging purchases is habit forming. Sooner or later, you will be in bigger debt trouble than you know how to handle. Put a stop to things now while you still have a chance of fighting your way free.