Are You Financial Healthy?

healthy-250x195Many of us spend time and effort making sure ourselves and our families are healthy, but what about our finances? All too often, finances are an out of sight out of mind part of our lives until a problem arises. From income struggles to medical bills and overwhelming debts, your financial profile could be suffering. One of the biggest culprits to our financial health these days is credit card debt. Find out what your credit cards could be saying about you:

What do I use my credit cards for most months?

Some people use credit cards only for emergencies, like car repair or unexpected purchases. Others may only use their card for larger purchases like furniture, but pay off the balance within a few months. Unfortunately, there are many that use their credit cards for things like gas, groceries, and even bills. When this happens it is often through no fault of their own, it is simply the result of a financial hardship. However, this could mean a problem is arising that should be addressed before it gets to be a bigger issue.

What is my balance compared to my limit?

Many people don’t even know what their total spending limit on a credit card is. Whether the company raised the limit without you knowing or you just have failed to pay attention, it is important to know your  limit for two reasons. First, if you charge more than your limit you are likely to be hit with some big penalty fees. Second, if your debt balance is over 40% of your available limit you are likely to see a drop in your credit score. This is because your debt-to-limit ratio is too high, which is something credit bureaus look for when calculating scores. Take your debt balance and divide it by your limit, then multiply by 100. If this number is less than 30% you are fine, but it if is over 40% you could a sign you have a debt problem.

What is my overall payoff strategy?

It isn’t uncommon for people to only pay the minimum payment on their credit cards each month, but that doesn’t mean it is the best strategy. Paying only the minimum payment is going to take you years to repay your debt, not to mention the thousands in interest fees over that time. For example, a balance of $5000 can take you over 10 years to repay and cost you $4000 or more in interest when making only minimum payments. If you can’t afford to pay more than the minimum payment may want to consult a finance professional or an Arizona bankruptcy lawyer to discuss your options for getting out of debt. There are several other strategies that can have you debt free in far less time and expense than spinning your wheels making minimum payments.