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Article Series: Debt
Relief & Debt Consolidation
I Want To Get Rid
Of My Debt...NOW!
What
Are The Signs Of Too Much Debt?
Everyone has at least a little bit of debt,
right? Some have more debt than others; of course, some also
have more income than others as well. How can you know
if you have too much debt? Should you wait for a creditor to tell
you that you have too much debt and that the company will not
approve you for their credit card or loan? Do you need to find
out the hard way by having your credit card rejected in the
checkout line at the local mega mart? Are there any red flags
that can signal too much debt?
Here are the fifteen top signs that you carry too much debt:
After you pay every line item in your budget, you have very
little or no money left. Let’s say you pay your rent or mortgage
payment, credit cards, utilities and other bills, you barely
have enough for food and gasoline. If a financial emergency
were to strike you would be without funds to meet it.
Your
credit cards are maxed out or close to being maxed out. You can no longer pay them down in a month or two, but instead
you carry large balances on each card.
You are only able to pay the minimum monthly payment on your
credit cards.
You are “robbing
Peter to pay Paul”; in other words, you are
using the credit cards to pay off each other or to pay for
other recurring bills with them.
Are
you frequently subject to overdraft fees, over-limit fees,
and returned check charges? These fees can quickly eat up a
hefty chunk of your budget and you don’t get any services in
return.
Your debt to income ratio is too high. Ideally, you should
have a less than 20% ratio. Take your monthly debt related
expenses, such as credit cards, and divide them by your monthly
gross pay – that is your pay before Uncle Sam hits you up for
taxes, and before you pay any other payroll deductions - and
the resulting number indicates the percentage of your debt
to income ratio. Is it more than 20%?
Do you have to juggle bills and are there some bills that
you may need to skip in order to pay others? If, for example,
you are skipping the gas bill this month in order to pay the
light bill, then this is a red flag that your budget is in
serious trouble.
Do you have to ask friends
and family members for loans to
make ends meet, yet you are still falling behind on your bills?
Are you receiving
telephone calls from creditors, collection
agencies, and others that are trying to collect on your accounts?
Do you know how much money you owe and to whom? If not, this
should be a red flag that you are most likely in over your
head!
You are considering refinancing your home or taking out a
second mortgage to pay off your consumer debt.
You have contacted a debt management company to help you consolidate
your bills in the hopes of freeing up some disposable income.
You need your revolving debt in order to live each month.
This is a surefire way of realizing that you are living well
above your means and that you are spending money on things
that you really cannot afford to buy.
You keep looking for new credit cards to transfer balances
onto.
You have no emergency fund for those car repairs that seem
to come out of nowhere. Similarly, you cannot afford to put
some money toward a savings account, 401(k) or similar account.
As you can see, there are a number of warning signs that indicate
that you need to apply the brakes and look for some short term
as well as long term solutions to your credit problems. Fortunately,
there are many avenues you can pursue to help you not only
get a handle on your mounting debt, but to halt the process
and climb your way out of debt before it is too late. Debt
management plans, credit counseling agencies, loan options,
and consolidations are just some of the tools you can use to
get your finances back on track.
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SolveYourProblem.com
: 2007
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