Budget Kitty

Personal Finance in Plain English

  • Home
  • About
  • Contact
  • As Seen On
  • Archives
  • Free Money!!

7 Signs Your Debt Is Out Of Control

THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE READ OUR DISCLOSURE FOR MORE INFO.
Pin218
Share3
Tweet8
229 Shares

Last updated on October 9th, 2018

Signs your debt is out of controlDebt has become a way of life in America. Why scrimp and save for months to buy something you want when it is so much easier to just whip out your credit card?

You’ll worry about paying for it later, right?

Unfortunately, that’s a dangerous game and if you’re not careful you can dig yourself in a deep hole called The Debt Trap.

And once you fall into the trap, climbing out can be a long and difficult journey.

Trust me, I’ve fallen into the debt trap myself.

I’m not proud of it. In fact, it sucks.

In the past we made some poor financial decisions and we dealt with some unexpected expenses that really set us back.  We still carry some debt but we’re working on paying it down and we’ve learned (hopefully) to avoid the debt trap in the future.

If you’re struggling with debt now, take a deep breath. All is not lost.

I mean, it’s not great to be in debt but you can dig yourself out if you work hard and stay disciplined.

The key is to go into emergency mode. Stop using your credit cards, get yourself organized with a repayment plan, and pour every extra penny you can towards paying down your debt.

But how exactly do you know when you’ve fallen into the debt trap?  Luckily, there are some signs to look out for…

7 Signs Your Debt Is Out Of Control

Take a good luck in the mirror and see if any of these warning signs apply to you…

You only make minimum payments.

Credit cards aren’t all bad. They’re convenient to use, accepted just about everywhere, and you can use them to earn valuable rewards.

But they’re only good if you pay them off every month.  As soon as you start carrying a balance you’re on the losing side of the equation.

Paying only the minimum amount due each month is exactly what the credit card companies want you to do. You’ll end up paying a fortune in finance charges and it will take you far longer to pay it all off.

If you really can’t afford to pay more than the monthly minimum it’s a sure sign that your debt is out of hand.

You’re missing debt payments.

One of the worst things you can do when you’re in debt is to miss payments or send in payments late. When you fall behind in payments your creditors will hit you with hefty fees and penalties. They may increase your interest rate which means you’ll pay even more on your previous and future purchases.  They may also sell your debt and force you to deal with aggressive debt collectors.

Each of these actions will have a negative impact on your credit score and that will affect everything from your ability to get a loan to how much you’ll pay for car insurance.

You’re using credit cards to pay for day-to-day expenses.

When you find yourself paying for groceries, gas, and bills with your credit card because you don’t have enough cash on hand to cover them, it means you’re living beyond your means. Remember that one of the keys to staying in control of your money is to spend less than you earn.

Your total debt is increasing every month.

You should be tracking your debt payments so you know how much total debt you have taken on. Yes, that can be a bit scary but it is absolutely vital to getting out of debt.

You want to see your debt get smaller and smaller every month.  If the amount grows each month, due to added purchases as well late fees and interest, you’re going in the wrong direction.

You jump from balance transfer to balance transfer.

Some people think they can be slick by transferring their debt from one place to another. They open up a new credit card with a very low introductory interest rate and transfer their balance to the new card.

When the introductory period ends the interest rate goes up, so they open up another new card and do the same thing again and again.

This strategy may work for a while but it is a dangerous game to play. It’s really just a shell game where you move your debt from one place to another, when what you really want is to pay your debt off.

If you’re not careful you can overextend yourself and if you mess up the timing you could miss payments and get declined for a new card.

If you do decide to transfer your balance to a low interest rate card, don’t use that card for any new purchases. Instead, put all your focus into paying it down as quickly as possible.

You’re not saving any money.

Life is all about trade-offs. Every dollar you put toward debt payments is a dollar less you can put towards something else.

And that’s a problem because you need to be putting money aside for your retirement and other financial goals.  Not saving now means you’ll have to save even more as you get older and that doesn’t necessarily become easier.

It’s easy to say, “I’ll save more money when I earn more.”  But life has a way of disregarding your wishes and messing up even the best laid plans.  So even when you get raises and start making more money, you somehow end up spending more. That’s called lifestyle inflation.

No matter how old you are and what your current situation is, the time to start saving is NOW. The sooner you start the sooner you can start enjoying the power of compound interest.

You’re upset and stressed out.

Debt sucks. It can strain relationships and lead to all sorts of health problems.

Eighty percent of couples who get divorced cite financial difficulties as one of the primary reasons.

It’s normal to worry about money from time to time, but if you’re losing sleep and constantly anxious about how you’re going to come up with money to pay off your debt, you know your debt if of control.

Summary

If any of the warning signs above sound familiar (I can almost see you nodding your head) then you’re traveling down a dangerous road.

You need to take immediate action. Stop using your credit cards. Cut whatever expenses you don’t really need. Create a budget and stick to it.  Get a side hustle and use whatever extra money you earn towards paying down your debt.

Most importantly, don’t give up!  Yes, you are in a tough spot right now but with discipline and determination you can work your way out of it!

Debt is not fun. This list of debt warnings signs is a great way to know if your finances are out of control.
Pin218
Share3
Tweet8
229 Shares

Did you enjoy this post? Enter your email below and we'll let you know whenever we publish so you don't miss a thing.

* indicates required

Comments

  1. Phara says

    August 24, 2018 at 2:56 am

    Avoiding debt is important to prevent additional problems but sometimes acquiring debt is necessary especially if you got into unforeseen emergency or you got into a situation where you need a large sum and you do not have enough available cash on hand. So the debt that you need is the one where can pay it on an installment basis. Some debt needs you to pay in full and this kind of debt is difficult because acquiring wholesome amount to pay is hard. So it is better to those who let you pay on an installment basis.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

Survey Junkie 300
100+ Work From Home Jobs
11 Ways to Earn Free Money
Is the Costco Membership Fee Worth It?
Rockstar Finance
  • Bloglovin
  • Facebook
  • Pinterest
  • RSS
  • Twitter
Budget Kitty’s mission is to help families take control of their finances. We'll teach you the money lessons you never learned in school, and we give you the tools, resources, and knowledge to succeed. Sign up below to to get updates delivered right to your inbox!

Recent Posts

  • Which Seinfeld Star Has The Greatest Net Worth? The Answer Might Surprise You
  • The Smartest Things To Do With Your Tax Refund
  • Book Review – Financial Freedom By Grant Sabatier
  • How To Write A Check (With Pictures) In 5 Simple Steps
  • Most Common Reasons Americans Give For Not Participating In A 401(k)