Credit is not necessarily good or bad. It depends on how it is used. Take the following quiz to determine whether you are using credit wisely or getting in over your head in debt. Which of the following statements apply to you or your family?
_____ 1. Not counting your mortgage or rent, your consumer credit payments are 20% or more of your take-home pay.
_____ 2. You buy things with credit cards that you would not buy if you had to pay cash for them.
_____ 3. You charge day-to-day expenses, like shampoo, instead of paying cash because you do not have the money.
_____ 4. You pay only the minimum amount due on your credit cards each month.
_____ 5. You make so many credit purchases that the amount you owe does not decrease but actually increases from one month to the next.
_____ 6. You are often overdrawn on your checking account, so you must charge everyday purchases.
_____ 7. You take out new loans to pay old ones.
_____ 8. Your family has frequent arguments about money.
_____ 9. You often have to skip some payments to make others.
_____ 10. You have had to ask a family member or friend to cosign a loan.
_____ 11. You hold more than ten credit cards, including bankcards and gasoline and department store cards.
_____ 12. You do not know how much you actually owe.
_____ 13. You borrow money to pay expected expenses such as insurance and taxes.
_____ 14. You have been turned down for a credit card or loan in the last six months.
_____ 15. You put off medical and dental visits because you can not afford them.
If you checked three or more of these statements, take the time to evaluate your use of credit and develop strategies to bring your spending into line with your income. Your situation is not hopeless, but it will take a commitment to correct the situation and get back on the road to financial security.
Two local resources for assistance with outstanding debt are Rutgers Cooperative Extension's Power Pay Program, at 973-579-0985, and the Consumer Credit Counseling Service of New Jersey at 888-726-3260 (toll free). PowerPay analyses are available for $2.50 and calculate the fastest way to repay outstanding debts by applying monthly payments for paid off debts to remaining creditors to save both time and interest. Information is needed about the names of creditors, amount of outstanding debt, monthly payments, and interest rate in order to complete an analysis.