4 Warning Signs That You Have Too Much Debt
Heed these debt warning signs and judge if you have taken on too much debt. It can happen to anyone, but the sooner you recognize your problem, and face it, the sooner you’ll begin to make positive financial decisions.
Unsure About Your Debt Amount
If you are currently unsure about the amount of debt you hold, you’re not taking good enough care of your finances. Being aware of your money is crucial. You should know how much is coming in, how much is going out, and where it’s going. Financial awareness is the first step towards financial freedom. Create a spreadsheet, or download an app and track your spending. Once you’ve gotten an understanding of your own financial choices, your financial planner Orlando will also be able to guide you moving forward.
Avoid Looking at Bills
If you’re afraid to open your bills, you’re avoiding a problem that will only get worse as you continue to ignore it. Missing a due date does not mean that debt is erased and you no longer owe the money, it’s actually becomes even worse, because now you will also have to pay a late fee in addition to what you originally owed. Your credit score will also decrease as you miss payments and rack up late fees.
Be diligent and mindful of your due dates, and if you’re feeling overwhelmed, speak to your creditors about help. There are lots of programs available to help people get back above water, don’t be afraid to see that out.
Maxed Out Credit Cards
If your credit cards are maxed out, you no longer have control over your debt. When you rely on credit cards to bridge financial rough patches, in addition to how you use them regularly, eventually you’ll hit your credit limit which is not good for your credit score. If you go over your credit limit you’ll also incur fees, and paying that high amount back, with interest, will take a long time. If you’re able to, avoid making cash advances, and pay more than just the minimum due. If you have a spending problem, talk to a professional to get help, and if you’re still stuck, look for a new credit card with a good balance transfer option, and a low introductory interest rate. That should buy you some time and help you pay down a good chunk of your debt.
If you don’t have any savings, you have too much debt. Without any cash reserves, even one unexpected expense could send your strained finances into an even more problematic debt cycle. Having savings is the first line of defense against going into debt in the first place. Talk to your advisor or organize your spending habits yourself and figure out a way to cut back on your expenses. Then start setting aside at least 1% of your monthly income until you’ve amassed several months of living expenses. This emergency fund will be the key to keeping you out of debt when the unexpected strikes.
There are many schools of thought about what debt is good debt and how much of it people should have. At the end of the day, the majority of us rely on debt to live, but that also means with one wrong move, any one of us can get stuck with a lot of debt and not a lot of ways out from under it. Talk to your financial professional, and get your spending organized. If any one of these signs hits home, take all the necessary precautions and subsequent action to fight back and start eliminating your debt.