People who find themselves heading into debt problems did not get there overnight. There are many signs that can warn a person if they are heading down a path of debt problems. Knowing the signs can help someone regroup their finances rather than having their debt spiral out of control.
A clear sign of losing control of your debt is your bank account. The average person has seen their balance dwindle to almost nothing on more than one occasion. Unforeseen emergencies or overspending can drain an account. However, if you are finding that your account has next to nothing month after month, you could be on the verge of debt problems – especially if you are overdrawing your bank account.
Before you get to the point of overdrawing your bank account, you need to take a hard look at your expenses and begin cutting back. Create a budget and stick to it! By cutting back $25 a week on unnecessary expenditures, you can have as much as $100 extra every month to put towards a bill or put in your savings account for emergencies.
Three important factors to consider with credit cards and major debt problems include balances, limits, and monthly payments. If you are consistently using your credit cards and only paying the minimum payment each month, you are going to end up in the abyss of debt.
Only paying the minimum payment each month leads to high balances and maxing out the credit card limit. Having high balances on credit cards and reaching the limits do not look good on your credit report. If you cannot pay more than the minimum payment on a credit card each month, it’s time to put that card away and look for an alternative to making purchases.
Robbing Peter to pay Paul? Everyone has monthly expenses – groceries, gas, electric, mortgage or rent and the list goes on and on. If your paycheck is not covering your monthly expenses, the path to debt problems will be a short one. If your bills are late or you are juggling bills, trying to decide which can be paid now and put off until later, then you can quickly become overwhelmed.
Before you reach a point that bills are months behind, it’s time to get back to basics. If you are unable to pay the cable bill, maybe it’s time to shut off the cable until you become more financially stable. Some expenses that we see as necessities are actually luxuries – cell phones, cable, entertainment, and those Starbucks coffees.
Once you have reached a point that you are struggling, it’s time to take charge of your debt. Don’t wait until the walls start closing in to do something about your finances.Create a budget, talk with your family about cutting expenses, and as hard as it is – stay on track.