Here are the top ten signs of underlying debt problems creeping into the household, how to spot them and prevent them from escalating
Making only the Minimum Monthly Repayment on Credit Card Debt
Minimum monthly repayments are typically set at ridiculously low levels, to encourage borrowers to take up their maximum credit allowance as quickly as possible. And, with just a small repayment each month, it will take many years to pay off the debt plus the thousands in accrued interest.
No Knowledge of Over-Spending and a Reluctance to Find Out
Losing track of how much is being spent and where the money is going is a sure sign of over-spending. It indicates a total loss of control over the individual’s finances.
Borrowing More Money to Pay Off Existing Debts
Getting further into debt by borrowing more to meet other debt payments is a dangerous path to follow and increases the risk of developing serious long-term debt problems – particularly under higher interest methods such as payday loans, credit card cheques or cash advances.
Spending Outstripping Earnings
If someone is spending more than he or she earns each month, or is not sure whether their salary is actually covering your expenses, then that person is heading for serious trouble.
Using a Credit Card for Everyday Expenditure
Regularly using a credit card to pay for everyday essentials, such as food, fuel or to pay household bills, will overstretch any budget – especially if the balance is not cleared each month.
Regularly Late Paying Bills
Late bill payments, bounced checks, credit card overspend and digging into the overdraft, will incurr extra fees and charges from the lender. This will increase the debt and damage credit ratings.
No Savings
Anyone unable to put even a little bit of money aside each month because their wages are being swallowed up by debt repayments is in real trouble. When the unexpected happens, like a new tire for the car or a vet’s bill then there’s no money to pay it, meaning a credit card is the only answer.
Hard to Talk about the Situation
Lying to friends and family about debt problems, or being economical with the truth about spending habits is another sure sign that the person in denial about debt.
Cards Declined, Credit Rejections
This is usually due to available credit being exhausted or too many credit cards in issue even if some are no longer in use. It might also be because of a poor payment history.
Constantly Worried about Finances
Recent research revealed that 61% of people in serious debt aren’t sleeping due to the stress of the situation, and almost a third of people have taken up to six months off work as a result.Anyone in this position should seek help immediately.
If you have spotted one or more of the above habits in someone you know or in a member of your family then things might already be worse than you think. Fortunately there is a lot of help available. Start with a government approved help line to discuss the options.
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