FINANCIAL IQ TEST: How Healthy is your Debt Management?

By Nora Dunn. Last updated 22 October 2017. 7 comments

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.



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.



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.



Did you keep track of how many times you answered YES, NO, and NOT SURE? Great! Give yourself the following points for each answer:

YES = 4 points

NO = 0 points

NOT SURE = 2 points



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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Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Guest's picture

I scored pretty high on your test! Very happy. The term "debt management" seems a bit lackadaisical to me. I prefer "debt blaster" or "debt killer," as I pretty much loathe debt. I understand what you mean about debt management though . . . we need to make sure we understand what debt is and how to get rid of it. Great article sir!

Guest's picture

I scored a 60. Yeah for me I guess.

I definitely need to get a list of all my credit cards in a safe place.

I question closing all the credit cards you don't use. By lowering your amount of available credit, aren't you in effect lowering your credit score?

Nora Dunn's picture

@John - Thanks! I like the term debt management because, although often debt is bad, other times it can actually be good (as in a mortgage or leveraging), and sometimes it's just plain necessary. If we know how to manage it, then we'll be all the better at blasting and killing it! (smiles)
@David - Great score! I'm glad you saw an area for improvement by virtue of the questions too. That's what I was going for!
In terms of closing the credit cards you don't use: you have a great point. Here's the scoop:
A) If you are carrying debt, then closing out accounts you don't use will reduce the amount of overall credit available to you, thus increasing your ratio of debt to available credit. This can make your score go down.
B) If however you're not carrying much or any debt, then closing out accounts you don't use will reduce the number of credit vehicles you are carrying (which increases your score - especially if you have a bunch of dormant credit cards lurking around), and you'll be more likely to be approved (and be able to negotiate interest rates) for larger loans like mortgages.


Guest's picture

I have a high score. Well, because I don't have a big debt now. But consider future, if I buy a house, my situation would be totally different.

Make a good plan and keep a backup funding are the keys to your healthy financial plan.

Oh, forget to say, I have a score 62. :)

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Guest's picture

I like the idea of what this plan is teaching. Its easy to think that most people know the correct answers and follow them, but that is not the case. Just listen to the radio and see how many credit card debt relief commercials come on the air.

I would add one comment about credit cards. I do not have a problem transfering a balance to a low interest credit card, but then stop using it, till it is paid off or moved to another card. You can beat a bank's rate sometimes, but watch your credit score doing this.

Nora Dunn's picture

@Andy - Great tip about having backups in place. And you'll still score high with a mortgage; just make sure you adhere to the guidelines/questions! ;-)

@BasicMoneyTips - Thank you! These Financial IQ tests are certainly based on reader honesty - it's obvious what the "right" answers are. And if it isn't initially obvious, hopefully some readers can learn from it too.

Great note about the balance transfers to 0% credit cards. It's a slippery slope to a bad credit rating if you're not careful and don't stay on top of it.


Guest's picture

Preety good info about how to better understand ones asset.