Financing Your Life A Guide to Controlling Your Finances, Today 
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Debt can be a helpful part of establishing your financial future. It can be a necessary step in making an investment in something valuable, such as a home or education, or it can help you successfully get through a temporary hardship with a reasonable fee.
But debt, like most things, is only good in moderation. Answer these five questions to find out if your relationship with debt is heading in the wrong direction.
- Do you rely on credit cards to get through the week or month? Sometimes, you run into an emergency situation and need a credit card to help you out. But if that happens week after week, it’s no longer an emergency—it’s a lifestyle. Stop the habit of relying on credit cards and tighten up your budget so that you consistently spend less than you earn.
- Has your credit score fallen? Many of the incidents that cause your credit score to drop are indicators that you aren’t treating your debt properly and may not be in control of it. This can include late payments, rising credit card balances and increased credit applications.
- For the last three months, have you only made minimum payments on your debts? Every month, you should make higher than minimum payments on at least one credit card or loan so that you can pay it off quickly and then roll those payments over to another account. While you may occasionally skip a month, if you’re consistently only paying minimums, then you’re not doing enough to rid yourself of the debt and should consider getting more focused on that goal.
- Have you got more bad debt than good? Not all debt is bad. Some, like home loans and student loans, are low interest and can increase your net worth later on. But if you’ve got more bad debt, like credit cards, personal loans and other high-interest accounts, you’re tipping the scales in favor of bad debt.
- Have you gotten one or more payday loans in the last six months? Payday loans are bad news—every time. The interest rates, fees and terms are generally predatory and using them often creates a cycle of dependency. If you’ve had to secure one of these in the past six months, you need to reevaluate your budget and find a way to make cuts to your spending so you can start living within your means and stockpiling emergency savings to rely on instead of payday loans.
Credit isn’t always bad, but it can be an albatross across your checkbook and a detriment to your financial future. Be careful and respectful of it; control it so it doesn’t control you.
