Published on January 11th, 2011 | by Pete0
10 Warning Signs of Debt
So, we’ve talked about what not to when you have debt. But how do you know if debt is a problem for you? How do you know if you are in what is often called ‘debt denial’? Here are 10 things to look out for.
1. You only pay the minimum monthly repayment on your credit cards
Credit card companies are wily beasts. The minimum monthly repayments they charge are always set very low. This is deliberate, and designed to keep you in debt to them for longer. This way, they can make more money out of you in interest charges.
2. You could not say how much the total of your debt is, and are avoiding finding out.
If you are in this situation, then it is likely to be the case that you have lost track of how much you spend, and are possibly regularly spending too much currently. When in debt, losing track and not monitoring your money are problems, as it normally leads to spiralling debt, and a sense of being overwhelmed by, and not in control of your finances.
3. You borrow more money to cover established debts.
As debts spiral, out of desperation people can borrow money to pay other debts, often at high and uncompetitive interest rates. Sometimes people use credit cards to meet debt repayments. This clearly does not solve the problem; it’s merely fire fighting instead of making your financial house fire proof!
4. You don’t have any savings
A classic sign of debt is that after bills and household essentials are paid for, there is nothing left over to tuck away into a savings account. This could be an indicator that your debts are too high.
5. You are spending more than you earn
If you find yourself in the position where you have more going out than coming in, you could be in financial trouble. Similarly, if you have no set budget, or regularly run out of money before payday, this could be a tell tale sign that debt is part of your life.
6. You find it hard to talk about money with friends or family
If you find yourself regularly feeling embarrassed, awkward or trying to move conversations on when the subject of money comes up, it might be that you are subconsciously aware that all is not well in that part of your life. If you find yourself lying to others about your financial situation, it might be the case that you are also lying to yourself about it.
7. You are regularly late with your debt repayments
It costs us a lot in fines and fees when we miss payment deadlines, and therefore people don’t normally miss them because of apathy (that being said, it’s not unheard of). If you are consistently late, it could be that you are waiting for more money to become available to pay the debt. Unfortunately, missed payment fines and bounced cheque fees do nothing but drive people further into debt.
8. You regularly use your credit card for everyday spends
If you are having to rely on your credit card to pay for essentials such as petrol or everyday shopping, it could be an indicator that there are problems. This approach to spending will increase your debt and exacerbate the problems you are experiencing.
9. You have been rejected for credit
Of course there are many reasons that people get rejected for credit. However, the main reasons are normally that people have already got too much credit, or have missed payments in the past. A bad credit rating doesn’t help, and this in itself can be a clue to the presence of debt in your life.
10. You are constantly worrying about your finances, or you are losing sleep
This is a massive clue to the fact that you are in debt. If you are having intrusive and consistent anxiety provoking thoughts about your finances, it is time to be honest with yourself and prepare for action. Research indicates that over half of people who are in serious debt are suffering in terms of their sleep. If you are losing sleep, now is the time to take action.
If any of the above warning signs apply to you, it is probably time to have a closer look at your finances. Debt is not the taboo subject it used to be (even though it can feel like it is at times).