Do You Need to Get Out of Debt?

Not everyone who has debt needs to get out of debt. If, for example, you can make your mortgage and car payments and still pay off your credit card in full every month, you might not need to get out of debt. In short, if you can make timely payments on your good debts and pay off your bad debts in full, you most likely don’t need to use the debt-management strategies in this guide.

On the other hand, if you’re in a debt spiral, you do need to get out of debt. A debt spiral occurs when you cannot pay your monthly balances on bad debts in full each month and make only the minimum required payments. As you continue to make the minimum payments, you inevitably charge more expenses, which increases the balance and the amount of interest that you owe, leaving you in a spiral of endlessly compounding debt.

You probably are if: