SIGNS OF CREDIT TROUBLE

A big sign of credit trouble, as we mentioned previously, is when you can no longer pay your bills out of your regular income. If you're dipping into your savings accountor looking for money elsewhere to payoff credit card bills or other debts, you're heading for trouble fast, if you're not already there. Even if you still have money in the bank, you're probably still heading toward a financial crisis.
Some people get so far into debt trouble that it's extremely difficult to fix. If you think you're having trouble managing your debt, it's very important to acknowledge the problem early and to take immediate steps to fix it.

The rule of thumb is that your total debt at the end of the month should not be more than 36 percent of your monthly gross income. Total debt service (amountyou are required to pay monthly to keep your debts/loans current) includes payments for rent or mortgage, car payments, college loans, and charge card (the kindyou must payoff every month) payments. If your debt is more than 35 percent of your income, you'd better take a closer look at whatyou're spending money on.

Many consolidators are honest and will help you with your debt situation (although the problems outlined in the preceding section may still apply). Unfortunately, however, because so many opportunities exist to make money at the expense of desperate debtors, some consolidators are less than honorable.

Some firms charge high fees and then do little or nothing to help you with your debts. Others neglect to use the money you send them to pay your bills, replying to your call that you're covering their expenses with your frst payments (during which time your accounts get further past due).
To avoid running into these kinds of problems, search for reliable consolidators. Ask friends, associates, and debt counselors for recommendations; do an Internet search to learn about your options; or check a fIrm's background with the Better Business Bureau, Consumer Reports, or the Credit Information Center . Be wary when shopping for consolidators. Avoid any consolidator who promises easy answers. Make sure to check the company's track record and get a report of all costs (fees and interest) before signing anything.

People buy things and spend a lot of money for many different reasons. Some are compulsive spenders, buying more and more because it fills some needwithin them. Studies show that many women try to gain affection by financially supporting men. They are trying, in effect, to buy love. People who were abandoned or ignored as children sometimes try to fill that emotional void with things and buy whatever they can. People who grew up with little money and few material comforts sometimes try to make up for their deprived pasts all at once. It's easy to get a credit card and use it to try to buy yourself some happiness. Unfortunately, when the bills start coming in and there's no money to pay them, reality comes back very quickly.

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