American households are carrying an average of nearly $16,000 of credit card debt, which translates into more than $2,000 in finance charges and fees each year, according to the Federal Reserve.
Even with statistics like these, freedom from debt is an achievable goal for every family. The first step in regaining control is to take an honest look at your overall financial picture. The experts at Money Management International have developed a “debt test” to help consumers asses their financial standing.
The Debt Test: 
– Is an increasing percentage of your income going toward paying down debts?
– Is your savings cushion inadequate or nonexistent?
– Are you near or at the limit of your lines of credit?
– Can you only make the minimum payments on your revolving charge accounts?
– Are you often late with bill payments?
– Are you paying bills with money earmarked for something else?
– Are you using credit to pay for items you used to buy with cash?
– If you lost your job, would you be under immediate financial strain?
– Are you unsure about how much you owe?
– Are you being threatened by collectors with possible legal action?
A ‘yes’ to any of these questions is a sign that you need to take a good look at your total debt levels, spending habits and plans for payoff. While a single red flag is not a sign of impending doom, it is an indication that you should take action to avoid future trouble.
The following tips should help you regain control and overcome the burden of debt:
Stop using credit temporarily. You cannot borrow your way out of financial difficulty.
Create a budget. After allocating funds for ‘needs,’ such as rent, food and bills, set aside an amount to go into savings each month. Then, set aside an amount that you can spend on ‘wants,’ such as clothing and entertainment.
Assess your debt. Gather all of your statements and find out who you owe, how much you owe, and what interest rates you are paying. Being informed will help you make a good plan for payoff.
Adjust your spending. Write down each purchase you make for two weeks. Then, take a good look at your list. There is a good chance little purchases are taking a big bite from your budget.
Communicate with your family. It is important that all members of your family understand your financial goals, and the changes that are going to be made, so they can fully support those changes.
Get help. Career counseling, VA benefits, United Way agencies and nonprofit credit counseling organizations may all be of assistance.
Learn from your mistakes. An emergency savings account can protect you from future setbacks. Practice your new habits each day to ensure that you are improving your financial standing rather than harming it.
Source: Money Management International