FINANCIAL IQ TEST: How Healthy is your Debt Management? (2024)

How well do you understand your debt and how to manage it? Do you know the different types of credit available to you, and how to manage your credit rating? Do you live within your means, or are you up to your eyeballs and sinking?

Following is a Financial IQ Test to help you determine how healthy your debt management techniques are. Even if you aren’t in debt, this quiz may be illuminating for you. Simply look at each statement, and answer it with a YES, NO, or NOT SURE. Keep track of your answers, and we'll see how you score at the end. Then, check out the resource articles below to increase your knowledge base. It’s a big bad world of debt out there!

FINANCIAL IQ TEST: How Healthy is your Debt Management?

Knowledge / Awareness

I know how much I owe and to whom, and what each interest rate is.

I understand the difference between secured and unsecured debt.

I understand the difference between good debt and bad debt.

If my mortgage interest rate increased, I could easily handle the increase in payments.

I never get payday loans.

I know the difference between a line of credit, credit card, and fixed loan.

Credit Cards

I don’t charge anything new to my credit card if there is a balance outstanding.

I never use my credit card for cash advances.

I understand the consequences of making only minimum payments on credit card debt.

I will use one credit card to pay off another only if it is a 0% interest balance transfer deal and I can pay it off in full before the rates increase.

I never carry a balance on department store credit cards if there are interest charges or fees.

Transactions

I negotiate interest rates and/or annual fees with credit card companies, mortgage issuers, and other lenders.

I pay the entire balance on my credit card each month, before interest is charged.

If for some reason I miss a debt payment, I immediately call the lender to advise them of what happened to reduce or eliminate fees and penalties.

Security

I check my credit card statement every month for suspicious activity or incorrect charges.

I have a list of all my credit card numbers, and phone numbers to call if they are lost or stolen.

Credit Rating

I have a good credit rating.

I check my credit score regularly.

If I stop using a credit card, I cut up the card as well as call the credit company to have it officially cancelled.

Scoring

Did you keep track of how many times you answered YES, NO, and NOTSURE?Great! Give yourself the following points for each answer:

YES = 4 points

NO = 0 points

NOT SURE = 2 points

Analysis

Score 0-25

Whoops. If you have debt right now, you’re probably feeling a bit out of your league. Read some of the articles below to educate yourself on the areas you answered “no” the most to. Next: it’s a soul-sucking job, but make some time to read the fine print and get to know the debt vehicles you are working with. And if you feel like things are getting out of control, see what a credit counselor can do for you.

Score 26-50

You’re probably doing okay, but you don’t know what you don’t know, and there could be a better way to manage your debt. Make sure you’re minimizing interest charges, using the correct debt vehicles, and taking measures to keep your information and credit rating solid and secure. If any of the questions above left you scratching your head, check out the related articles below for more information.

Score 51-76

Congratulations: you have a healthy debt management plan. Although there is always room for improvement, you’re on the right track. Stay on top of your debt – and knowledge of it – and you’ll be on your way to a debt-free life sooner than later (if you’re not already there).

Resource Articles

Credit Cards

Wise Bread’s Ultimate Credit Card Guide

Top Seven Reasons why I use my Credit Card for Everything

The Dirty Secrets of Credit Cards

Managing Debt

Six Steps to Eliminating Your Debt Painlessly

DIY Mortgage Acceleration

Why Would Anyone Pay Mortgages with Credit Cards?

Worried About Debt? Tips on Managing Your Loans

When to use Savings to Pay Off Debt

Funding your 401k When You’re in Debt

Don’t Rely on Credit for your Emergency Fund

Debt Repayment is Not an Expense

Get out of Debt First, Then Focus on Saving

6 Powerful Debt Paydown Strategies

Credit Rating

Credit Scores

The Four C’s of Applying for and Managing Your Credit

Get Free Credit Score Monitoring with Credit Karma

Credit Counseling

Credit Counseling: When you Need it and When you Don’t

Dealing with Nasty Debt Collectors

Confessions of a Former Payday Loan Junkie

General Knowledge

The Different Types of Loans: A Primer

Tallying the True Cost of Debt

Acknowledge You Have a Problem With Debt

Stopping the Student Loan Debt Stress

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