Debt problems can begin so slowly that they initially don’t appear much of a threat. In time, though, they can grow and multiply. Then one day, you begin to notice how often your concern over debt dominates your thoughts.
It’s wise to act before it’s too late, and if you don’t take action in paying of your debt, it’ll only continue to grow larger. To help you recognize the symptoms, here are 7 signs that you need to take control and pay off your debt.
1. You Can’t Pay All Your Bills on Time
Don’t underestimate the negative impact of making late payments. Doing so can lower your credit rating. Soon, you could find it difficult to receive additional credit, rent an apartment, or qualify for a loan.
Paying bills late is a sign that your lifestyle is outpacing your salary. Ideally, your budget should allow you to pay each bill on time.
2. You Can Only Pay the Minimum on Your Credit Cards
If money is short, paying the minimum on your credit cards is a convenient way to avoid late fees. But it’s not something you can do each month without falling into more debt.
For example, suppose your credit card balance is $1000. Let’s say the card’s interest rate is 18%, and the minimum payment is calculated as the interest plus 1% of the balance.
That means you could pay a minimum of $25 each month. It sounds like a great deal until you realize you would be paying for the next five years. Over that time, you would have paid the $1000 principal plus more than $520 in interest.
3. Your Savings Account is Dwindling or Closed
When hard times come, one of the first things to suffer is the savings account. A diminishing bank balance is a sure sign of financial trouble. A savings account is supposed to finance the future, not pay for yesterday’s purchases.
4 Your Credit Cards Are Maxed Out
It’s tempting to use credit cards to finance a lifestyle, but using more than 30% of the available credit could be a sign of trouble.
5. You’re Pursued by Creditors
It’s difficult to deny things have gotten out of control if your phone is ringing constantly with bill collectors. But remember, there’s more than annoyance involved. Each phone call is a reminder you’re damaging your credit score.
6. You’re Using Credit or Savings for Daily Needs
Some people think nothing of using their credit cards to purchase breakfast, lunch, and dinner on a near-daily basis. Credit cards are convenient in those situations, but the balance can quickly get out of hand.
Similarly, you shouldn’t touch your savings account for routine matters such as buying groceries or paying the person who mows your lawn.
7. You Have Arguments With Family Members About Money
Family arguments over money reveal something is wrong, and you should act quickly. This problem can have ramifications far beyond your financial status. It can impact your marriage and your relationship with your children. Stress over money can be a destructive mental health issue.