Credit, they say, is one of those things that gets better the less you use it. But these days, that philosophy is one that seems to be more preached than practiced.

We live in a time of easy credit. Time was, credit was reserved for the already afflent. Then economists had a brainstorm: If they could get people to start spending, business would pick up and the economy would boom. Access to credit became much less restricted and consumers went on a buy now-pay later spending spree.As far as the economy went, the brainstorm produced amazing results. In the last 15 years consumer credit soared from $141 billion to $668 billion. Retail sales jumped 400 percent. Thirty million new jobs were created. And Americans got hooked on credit. (The average American has seven credit cards--and owes at least $3,000 on them.)

And while credit can be a useful and convenient tool, for many Americans credit has become a cruel ride on a very expensive merry-go-round, says Trent Searle, family financial specialist with the USU Extension Service based at Hill Air Force Base.

"When people overspend, most of their check goes to paying off bills. With little cash left, they have to resort back to their credit cards. Families are forced to live from paycheck to paycheck in the charge-pay-charge cycle," he says. "The irony is that it costs hundreds--even thousands--in interest charges to stay on the ride."

For some, debt is built out of necessity or desperation. But for a surprising number, says Searle, it is built on impulse. "We love to shop when we are bored, nervous or anxious. A few hours at the mall can relieve tension and offer a chance to escape our troubles.

Impulse spending causes us to spend on an average three times as much as we originally planned. Research shows that the average cash sale at a retail store is $8.25. The average department store credit purchase (ZCMI, Mervyns, Sears, J.C. Penney) is $15.93. The average bank credit card sale (VISA, MasterCard, Discover) is $20.47.

Along with the impulse factor, he says, families who take on too much debt typically have two characteristics in common: They don't work together in planning their financial future; and the more financial trouble they are in, the more likely they are to camoflage it by using excessive credit.

People who are having problems with their credit also tend to blame their salary--no matter what its size. But, says Searle, "the more a family makes, the more likely it is to take on excessive installment debt. In most cases, it's not even unemployment or big medical bills that cause financial disaster (although both, of course, can ruin any family's budget). The usual culprit is their own lack of financial planning, their own inability to look into the future."

And sometimes, he says, it is difficult to admit that you have a debt problem. "After all, if you can pay all of your bills on time, how can you have a problem? But suppose their were a real emergency. Suppose you had to get your hands on $2,000 by the day after tomorrow. Could you get it? Would the banks lend it to you? If not, you have a problem.

"What would happen to your finances if you suddenly lost your job, became seriously ill, or became widowed or divorced? If you are in debt to the point where you have no savings to help cushion an unexpected catastrophe, you have a real problem."

Take a look at the warning signs on this page. See how your situation measures up.

And if you have a problem, how can you get out of the credit trap?

Searle has some suggestions:

-Keep track of your expenses on a daily basis to avoid the leaks that many people encounter.

-Don't try to win the battle alone, get everyone involved. "The family that pays together stays together."

-Consider all your options. Trim your expenses and squeeze your budget. Look for ways to increase your income. Use the extra you can come up with as "power payments" in paying off debts. Start with small goals; pay off the smallest debts first.

When your first debt is paid off, don't start spending that money. Shift the entire amount to compound payments on your next debt, and so forth, until all debts are paid.

For example, a family has a $250 credit card bill, with a minimum monthly payment of $10; a $600 medical bill, with a minimum monthly payment of $50 and a $1,200 auto loan, with a monthly minimum payment of $60.

The family paid the minimum monthly payments each month, but decided they could scrape together a power payment of $40 a month. They made the power-added payment of $50 a month on their credit card. When it was paid off, they shifted that entire $50 onto their $50 medical bill and paid $100 a month. When it was paid off, they shifted that entire $100 onto their $60 car payment and paid $160 a month. Making compound payments, they were completely out of hock in about half the original time.

-On credit cards, as you make payments and reduce your balance, the bank will lower the minimum monthly payment. Ignore the bank's decrease. Keep the payments at your "power payment" level, or your pay-off date will take much longer.

-Commit to not using your credit cards. You'll never pay them off if you keep digging yourself deeper into debt.

-If you are already behind on payments, call your creditors and advise them of your situation. They can often work something out that will relieve a temporary crunch. If you have lost control and can't make ends meet or convince creditors to work with you, seek professional help. A good counselor might be able to get your current situation under control and help you to avoid a similar credit trap in the future.


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Free at last

When you get your debt level back where it should be, don't be foolish and fall back into your old spending habits. Refocus your goals. Focus on building your assets and bolstering your net worth. Here's some start-up advice:

-Open an interest-paying checking account. Stick to a budget. Pay everything by check. Monitor your spending by watching your check stubs. Keep an eye on the checks written to "cash."

-Become a saver. Plan to save at least 10 percent of your take-home pay. Stick the cash into the bank. Don't touch it. Let compound interest do its job. Set an amount in your monthly budget and pay it as if it were a bill.

-Establish an emergency fund. Plan to set aside money for real emergencies like a job loss or illness. You should have a fund equal to four months wages in a high-interest money market account. Set an amount in your monthly budget and pay it as if it were a bill.

-Create a set-aside fund. This is not a savings account. It's a spending account that earns interest while it sits. Try to keep at least $2,000 to $3,000 in this fund for insurance bills, property taxes, auto and home repairs, plus furniture and appliance replacement. Set an amount in your monthly budget and pay it like a bill.

-Set up a retirement account. You cannot retire on Social Security alone--unless you want to live in near poverty. Open an IRA or a 401K. Set an amount into your budget and pay it like a bill.

-Buy a home. Two-thirds of all Americans own their own house, condo or co-op. Owning a home is usually one of the best investments you will ever make--value increases, equity increases and mortgage interest is tax deductible.

-Protect your family. When buying insurance, buy only what you need and nothing more. With a young family, you may need a life insurance policy worth five times your income. You need a health policy covering 80 percent of the hospital and doctor bills with no exclusions for long-term diseases like AIDS or cancer. You need a disability policy paying 70 percent of your income should you become disabled. You need an auto policy paying at least $100,000 per injury, $300,000 per accident, $50,000 in property damage, plus fire and theft if you need it. You also need a policy that replaces 80 percent of the current value of your home, excluding land, and at least $100,000 in liability suits.