Being in debt is inevitable at some stage in your life. Unless you have a huge trust fund or a fabulously well-paid job, you are probably going to have to borrow money to fund the purchase of a house or brand new car. There is nothing wrong with borrowing money, as long as you are sensible. Unfortunately, not everyone is sensible with money and after a few years of reckless borrowing and spending with impunity, they end up in serious debt.
Consolidating debts is one way to deal with a debt crisis. You can easily calculate your savings with this personal loan calculator. However, before you reach this point, you need to recognize that you have a problem. Unfortunately, many people bury their head in the proverbial sand and ignore the signs. So how can you tell if your debt is snowballing into a monstrous problem?
Life in an Overdraft
Once you are in debt, every cent you have is accounted for. Most of your spare income will be spent servicing debt repayments, so you probably won’t have anything left for food, bills, and other miscellaneous items. It is common for people to end up living permanently in their overdraft. If this sounds like your current situation, you need to rein things in, and fast.
You Have Dozens of Credit Cards
Credit cards are great. They let us pay for things in advance, even if we don’t have any money. A credit card is very useful, but if you use them too much, you won’t be able to keep up with the repayments. If you have a large number of credit cards, all of them maxed out to the limit, you have a debt problem.
Borrowing from Peter to Pay Paul
Withdrawing money from one credit card to pay another is a bad sign. It means you have no disposable income and your debts are piling up like a snowdrift in a snowstorm.
Final Demands Piling Up
Is your doormat covered in final demands? Do you dread the mailman coming in case there is another bill to pay? Not a good sign!
Don’t ignore your bills. Instead, call up your creditors and see if you can work out a structured repayment plan to help you get on top of your debts.
Phone Calls from Debt Collection Agencies
Companies often hand over problem debtors to collection agencies, whose job is to hunt down people that owe money. You can usually run, but you won’t be able to hide forever. If you have collection agencies calling your phone day and night, it is time to face the music.
You Can’t Sleep at Night
Debt is awful. It sucks the pleasure out of life when you know you have no money and payday is four weeks away. If you can’t sleep at night for worries about your debts, you need to ask for help.
Talk to a debt counselor if you are concerned about your debt problems. It is the only sensible way forward.