It’s not always a huge and sudden debt (like a medical bill, for example) that causes money problems. Sometimes a problem with debt can sneak up on you little by little. You may already display behaviors that imply that you have a debt problem without even realizing it.
This list of warning signs that you have a debt problem can help you figure out if there are some money issues developing in your life that you may not be aware of. Finding out if you have a debt problem sooner rather than later can save you thousands of dollars in the long run. Read on to see if you have fallen into any of these traps and to get useful tips for getting out of debt.
1. Overusing Your Charge Card
This is one of the top behaviors that can lead to debt problems. Simply put, your credit card should not be used for things that you can’t pay off at the end of the month. Instead, save it for emergencies and big purchases that you plan to pay off over the course of a few months. It’s easy to get in the habit of giving yourself a fun credit card shopping spree once in a while, but those debts can add up quickly with high credit card interest rates.
(Also read: 5 Signs That You Have A Credit Card Addiction.)
2. Putting Off Payments
Do you often look for ways of delaying payments? That includes layaway plans, postdated checks and loan deferment or forbearance. It can also happen when you pay the absolute minimum required each month for your loans or credit cards when you could potentially pay more. It’s easy to abuse some of these services and programs since they allow you to keep your money for the time being. However, it’s much better to start paying off debts as soon as possible to avoid them ballooning over time. As a rule, your required monthly payments to creditors (not including rent or a mortgage) should not total over 20% of your take-home income. If it does, then you need to start an aggressive debt repayment plan to get this number under 20%.
(Also read: Easy & Effective DIY Debt Reduction Plan.)
3. You Can’t Afford Necessities
When you find that you just don’t have the money to pay for things you really need – rent, utilities, groceries, health insurance, prescription medications, etc. – then it means that you’re seriously living beyond your means. Barring any personal emergencies or unemployment, you should be able to afford all the necessities at the very least. Can’t afford rent? Move into a shared house or apartment with some roommates. Not enough money left for groceries? Make all your meals at home to avoid wasting money on meals out. Avoid getting further into debt by making these necessities a priority for your spending and keeping other purchases to a minimum.
4. Using Bad Loans
Are you depending on payday loans, cash title loans and other risky loans to get through the month? These loans are often one of the clearest signs of a debt problem, especially when someone is utilizing them regularly. The loans are easy to get, so it’s tempting to get that extra influx of cash so quickly. Be careful, though, because these loans can lead to a dangerous cycle of debt and can cost you a lot in the long run.
(Also read: 4 Different Types Of Loans To Avoid.)
Help For Getting Out Of Debt
The good news is that, if you display one or more of the debt problem warning signs listed here, there are a few things you can do to get back on track financially, such as:
- Make a budget: Setting a strict budget can really help you limit spending and direct more of your extra money towards minimizing your debt.
- See a credit counselor: A credit counseling session will help you evaluate your finances and set goals for which debts to pay off first.
- Debt consolidation: If you have various debts to different creditors, a debt consolidation plan may help you simplify your payments and lock in a reasonable interest rate. (Also read: Easy To Follow Debt Consolidation Advice & Tips.)
These warning signs of a debt problem are no joke. Falling into debt can have serious consequences for you and your family. Make sure you stay on track with a detailed budget and by making sincere efforts to stop overspending and start reducing your debt.