That's a very useful article. I think the first sign that credit card debt is becoming a problem is carrying a balance and only paying the minimum monthly payment. The minimums usually don't cover the interest so if you do that, the debt is just going to start creeping up and people just don't seem to be aware of that.

Goldbug wrote:

FrankN wrote: Lexie, I am sorry to hear that, and surprised you were actually able to do that anyway. I hope you made it out okay.

I've heard that from a few people who got into debt. Taking a cash advance from one card and using it to make the minimum payment on another is effectively robbing Peter to pay Paul. The charges for the cash advance just made the debt larger and put the problem off. Well done for getting out of it, Lexie.

That is exactly right. You are really delaying the inevitable. I am working with a family who was doing that for 6 months and did not realize all of the fees and charges that were being added. It really made their situation much worse.

FrankN wrote: Lexie, I am sorry to hear that, and surprised you were actually able to do that anyway. I hope you made it out okay.

I've heard that from a few people who got into debt. Taking a cash advance from one card and using it to make the minimum payment on another is effectively robbing Peter to pay Paul. The charges for the cash advance just made the debt larger and put the problem off. Well done for getting out of it, Lexie.

Lexie, I am sorry to hear that, and surprised you were actually able to do that anyway. I hope you made it out okay.

I recognized we were in trouble when we began using one credit card to make payments on another credit card. We inevitably ended up in bankruptcy and learned a valuable lesson. Never again!!

MikeJ, please let us know how you are progressing to your emergency fund savings goal!

Charging more than you pay should be the first indicator that people see. We need to be in the habit of paying more than we charge.

A year's worth might be difficult to reach, but its a good target. I normally hear three months, and that's what I try to keep. If you're keeping a full years reserve, that's a lot of money and I'd suggest you look at investing it somewhere that gives you a very good interest rate on it!

That is a great goal, and I am not sure you absolutely need a full year's worth of living expenses. As long as you are investing that emergency fund, I think that is a great idea.

Yeah, an emergency fund is invaluable. My goal is to maintain a full year's worth of living expenses (at my current lifestyle level). I'm not quite there yet but I'm working on it.

That is good you were able to take a positive out of your bad situation. I am sorry you had to go through that, and I am glad you came out of it positively.

I had to learn about the importance of emergency fund the hard way. I was lucky because it was nothing too big and serious, although I still had to kick myself pretty hard to be able to pay it back. I'm more strict with myself when it comes to monthly saving and shopping budget.

I am sure that was a scary feeling! if you don't mind me asking, what kind of plan did you take and how did you pay them off?

Breakinger wrote: There are some really great warning signs on here to let you know if you are headed towards credit card disaster. I've only had a few of these pop up from time-to-time. I think the best advice is to have a plan in place to pay them off as quickly as you can and definitely stop using them as soon as possible.

I'm in the same boat as you. I used to have a lot of these issues but I no longer do. I now just basically use the card for vacations and pay it off before we take our next one. I once had three maxed out. I made a plan, stuck to it and paid them off.

These are great tips! thank you for sharing.