Consumer Debt: How Much is Too Much?

Americans charged $1.2 trillion on their credit cards last year according to industry analysts, a 20 percent increase over 2001. The average cardholder charged $10,000, yet only 44 percent pay their balances in full each month. This means a lot of people owe a lot of money on credit cards, and some owe too much.

The amount of outstanding debt owed by South Texans has remained high despite a slumping economy, according to Consumer Credit Counseling Service. Kim Womack, director of community relations for CCCS of South Texas, said their average client owes over $23,000 in short-term debt and has 12 credit accounts. "We are seeing a slight reduction in monthly incomes, but no reduction in the amount of debt owed," said Womack. "When income drops but expenses don't, something has to give. People realize there's not enough to go around and start falling behind on payments. Some even exhaust their savings and 401(k) to keep up with the bills."

So how do you know if you owe too much? Take this CCCS debt test to find out:

-Is your savings inadequate or nonexistent? -Are you using credit cards for items you used to buy with cash? -Are you near, at, or over the limit on your lines of credit? -Do you worry about how much you owe? -Are you only able to make the minimum payments on your credit cards? -If you lost your job, would you be in immediate financial trouble? -Is more than 15 percent of your net pay being used to pay credit cards?

Are you in trouble? Womack said you probably are if you answered yes to two or more of these questions. "Because debt problems often develop over time, many don't realize they are in serious trouble until it's too late," said Pridgen. "Credit counseling is always helpful and I encourage people to seek advice early, before any payments are missed."

Over 42,000 area residents received budget and credit counseling, debt repayment and crisis assistance and consumer education from CCCS last year. CCCS is a nonprofit, United Way agency with offices throughout the Coastal Bend, Rio Grande Valley and Crossroads areas. A member of the National Foundation for Consumer Credit, CCCS has been serving South Texans since 1969.