13 Warning Signs That You Have a Debt Problem
Learn red flags to watch out for that could prevent you from building wealth and solutions to turn around your financial life.
“There’s one simple, powerful way to keep your credit score robust. Just pay off your credit card balances in full and on time each month.
Every other hack pales in comparison. Why? Because the math says so. Thirty-five percent of your credit score is determined by payment history, which is just shorthand for, ‘You pay your bills on time.’
Another 30 percent is credit utilization, which is a fancy way of saying, ‘You don’t max out your credit limits.’ Together, those two factors represent nearly two-thirds of your credit score.
So don’t fret about any other credit score hacks till you take care of these two. Otherwise, you’re wasting a lot of time for very little in return.”
Howard Dvorkin, CPA and chairman of the website Debt.com, always urges couples to unravel their finances before they tie the knot.
“It just makes sense, and it’s not cynical or unromantic, either. A credit score’s three digits are a window into the soul,” Dvorkin said. “You better know this before you get hitched, or even if you’re not getting married but plan to share major expenses.”
Howard Dvorkin, CPA and chairman of the website Debt.com, always urges couples to unravel their finances before they tie the knot. “It just makes sense, and it’s not cynical or unromantic, either. A credit score’s three digits are a window into the soul,” Dvorkin said.
Since we all know couples often fight about money, a partner’s credit score might just give you insight into how much you’ll disagree in the money arena, he said. “You better know this before you get hitched, or even if you’re not getting married but plan to share major expenses,” Dvorkin added.
“Just be honest with them – they’re human beings,” says Howard Dvorkin, certified public accountant and chairman of Debt.com. “Don’t be afraid to tell them the truth that you’ve been going through a divorce or that you had an illness or a problem with a sick child.”
“Think of recession-proofing your life like you would hurricane-proof your home,” says Howard Dvorkin, certified finance expert and chairman of Debt.com. “If a storm is days away, and I ask you where the hurricane shutters are, the worst answer you could give me is, ‘I think I have some in the garage, but maybe I need to buy some more.’ By then, it’s too late, and any exposed window could spell doom. Recessions work the same way, except their devastation can last months and linger for years.”
“You aren’t retiring early if you owe thousands on your credit cards at [a] 20% [interest rate] or more,” said Howard Dvorkin, a CPA, personal finance expert and chairman of Debt.com. “Your very first step is to add up everything you owe, then figure out how to pay it back. Retiring early with anything more than a mortgage is downright dangerous, and my advice is to delay retirement until everything is paid off – including your home.”
Howard Dvorkin, a certified public accountant and chairman of Debt.com, shares other instances when credit cards make more sense.
“Credit may also be the better option for making reservations and rental purchases,” he says. “Many retailers will not charge the amount immediately, but put a hold on the account to freeze the funds. This can be problematic for debit card users who need the money in their account to make other purchases.”
“My advice is to start saving 2% of take home pay and add 1% every six months until you think you can’t add to it any further,” Howard Dvorkin, a certified public accountant, tells CNBC Make It.
“But make sure to call right away so you don’t lose out on any rewards you accrued – if your card has been closed due to inactivity, you’ll need to be very active to get it back,” said Howard Dvorkin, CPA and chairman of the website Debt.com. “Call customer service or read through the card’s terms and conditions so you’ll know exactly how long a period of inactivity is allowed.”
“The average American has more than $35,000 in personal debt, according to Northwestern Mutual’s 2018 Planning & Progress Study,” said Howard Dvorkin, a CPA and founder and chairman of Debt.com. “If they look at this rule, they’re likely to say, ‘Geesh, 20% of my paycheck should go to savings? I’ll never make that!’ Then they’ll simply give up. It’s like dieting. How many of us give up because the diet plans just seem too daunting? If we set the bar too high, they won’t jump it. They’ll simply duck under it.”