10 Signs of Serious Debt Trouble (with help)
Most Americans have to deal with debt at one point in their lives or another. Even if your only debt is in your house and your car, you still owe money to creditors. Debt doesn't have to be a bad thing but when it starts spinning out of control, it gets harder and harder to crawl out of the hole you've just dug for yourself.
Unfortunately, when people get overwhelmed with debt, they often fall directly into a state of blissful denial. They avoid opening credit card statements and they put bills aside when they don't have enough money to pay. The out-of-sight, out-of-mind trick only works for a few months, however, before your life begins to tumble down around you.
If you're worried that you're tittering on the edge of debt denial, here are ten signs of serious debt trouble that you shouldn't ignore.
- Disproportionate Debt. When your debt continues to climb and your income level stays the same (or worse, decreases), then you should know you are heading for serious debt trouble. It is one thing to increase the amount of money you owe as you receive raises at work, but if your income doesn't match your debt, you're boarding a sinking ship. When this trend starts to occur, put the credit cards in the freezer and start paying with cash. Anything else can wait.
- Minimum Madness. Whenever possible, it is important for consumers to pay off their debt in large chunks rather than little-by-little. If you find yourself paying only the minimum amount owed each month on your credit cards, severe debt might not be far behind. Until you can pay off at least double the minimum payment, knock off the credit card usage.
- Credit Card Cross. You know that you're in bad debt trouble when you have to take a cash advance on one credit card to make the minimum payment on another. This will only spiral out of control as you are forced to acquire ever more credit cards just to continue making payments on time. A better idea is to consolidate your credit cards onto one card with a low interest rate.
- Wall-To-Wall Wallet. If your wallet is filled with nothing but credit cards—with a tiny space worked in for your driver's license, you should know that you have too many. Experts recommend that the average American should have no more than five or six credit cards, and should carry a balance on only one of those.
- Looming Limits. Discovering that you are nearing the limits on each of your credit cards? Over-limit fees can be exorbitant and it also means you've racked up considerably debt. Start paying your existing debts down before creating new ones.
- Spending Surge. If you feel that you might be approaching debt trouble, the solution is to stop spending. Unfortunately, many people take on the attitude that it “doesn't matter anymore”. You might be headed for a rude awakening, however, if you continue to charge more on your credit cards with each passing month. Don't allow yourself to get out of control.
- Sign-Up Syndrome. When you rush to sign up for every credit card offer that comes in the mail can also point to problems. The answer to debt problems is not to acquire new credit cards, but to budget your money so you can pay down the ones you've already used. Having too many credit cards can not only increase your debt, but also kill your credit rating.
- Spousal Swindle. Have you ever come home after charging several hundred dollars to your credit card, then lied to your spouse about how much it cost? When you start hiding purchases from your partner in life, you're probably heading for serious debt trouble and possibly the end to your marriage. Trust your spouse to help you with your financial problems rather than trying to deceive him or her.
- Debt Denial. You can only make things worse for yourself by refusing to come to terms with your debt trouble. If you neglect to open bills and pretend that you don't owe anything to anyone, you're setting yourself up to fail. Instead, face your debt head on and start making a plan to do something about it.
- Telephone Tag. And finally, you might be headed into denial of your money situation when you avoid talking to the creditors who are calling your house at all hours of the day and night. When you start hearing from collection agencies, it's time to make a plan to get out of debt.