You probably know that debt can increase stress levels, contribute to depression, and even wreck marriages. And the sad thing is that these days debt is so commonplace that most people don’t even think about it. While it might be normal to have thousands of dollars or more of debt in your name, it is anything but healthy for your financial future.
Keep in mind that having an excess debt in your name can prompt many other monetary issues, like missing bill installments, not being able to set extra cash aside, and getting more cash just to stay afloat.
Here are some financial warning signs that you have more debt or financial obligations than you can reasonably handle.
Paying One Debt with Another
Are you transferring credit balances from one card to the other in order to stay afloat or obtaining loans from different companies just to repay other loan balances? If that is the case, then you likely have a debt problem. Consolidating loans may help you get out of old debt; however, you take on new debts, so there is still no difference, and it is not good for your financial health.
It is not a good idea because, depending on the terms and conditions of your new loan, you may pay more in interest over the term of the loan compared to the terms and conditions of the debts that you consolidated.
You don’t have any Savings
Any debt or financial management plan should make room for savings. That is simply because the world is very unpredictable. And you require those valuable savings when any unexpected costs pop up. And if you have wiped out your savings, then it is a sign that you have too much debt.
You have to ensure that you set up your finances in a way that you have enough to save some money every month. For example, you must save for emergencies, miscellaneous needs, and your retirement.
Having Overdue Accounts
Note that overdue accounts usually result when you do not have sufficient money in your monthly budget to repay your debts, and this means you pay late. This is because your debts consume a significant chunk of your income. Also, it is worth noting that late payments also impact your reputation, and can tarnish your credit history.
Use of Cash Advances
If you are using cash advances from your credit cards just to pay other bills, then you may be in financial trouble. While cash advances may help you get funds quickly, if you are using Jack to pay Jason, then that is a clear indication your debt is out of control.
Also, remember that cash advances typically come with hefty interest rates and other fees.
If you are experiencing the above financial warnings signs, then you are getting out of control with piling debts. And it is important that you take action as early as possible in order to avoid sinking altogether.