Most of us have debts. These may range from mortgages to credit card bills to personal loans. Being in debt doesn’t mean that you have a debt problem. However, there can be a fine line between the two. Here are five signs that you may have a problem with debt.
You struggle to pay bills on time
If you regularly miss bill payments or have to beg, steal and borrow just to make payments on time, it could be a sign that you have a debt problem. This is particularly the case if you’re not paying loan repayments or credit card bills on time. Missed payments are often the start of a slippery slope.
You’re living in your overdraft/a line of credit
If you’ve got nothing in your checking account and are living in your overdraft or a line of credit, this could also be a sign of a debt problem. A deep overdraft or line of credit can be particularly dangerous if you find yourself at the bottom of it and are unable to claw your way out.
Your total debt keeps going up
If you find yourself continuously taking out more loans just to get by, this could be another sign that you’ve got a problem. Some debts can be a necessary form of investments such as a mortgage on a house or a business loan when starting a business – these are generally not a problem unless you’re continuously mortgaging or adding to business loans.
Your credit score keeps going down
Debt can affect your credit score – especially when you start missing payments. You could then find yourself being rejected by lenders because your credit score is too low. Every time a lender rejects you, this can harm your credit score further. You can learn more about credit scores here at Money Saving Expert.
Creditors are chasing you up for missed payments
Once you start missing payments, creditors may start chasing you up. These could be arrears for bills or defaulted loan payments. Once the chasing up moves beyond letters and you start getting phone calls or debt collectors knocking on your door, it’s usually a clear sign that there is a problem.
How to solve your debt problems
The earlier you tackle a debt problem, the easier it is to solve. There are a number of effective ways in which you can overcome a debt problem.
Consolidate your debt
If you owe lots of debts, you could consider paying them all off with a single loan (known as a consolidation loan). This can help you to keep track of your debts by turning them into one single monthly payment.
Get help from a debt advisor
It could be worth getting professional advice on how to deal with your debts. Debt advisors are able to help with all kinds of debt from small debts to large debts. If things are serious and you’re on the brink of bankruptcy, you may even want to consider getting advice from a debt discharge service such as Debt to Success System. Certain professionals may even be able to negotiate with creditors for you.
Start budgeting
Budgeting can stop you from overspending each month so that you always have enough money left over for bills. This can reduce the need to take out loans, as well as helping you to climb out of overdrafts and lines of credit. Budgeting may even help you to start saving money more effectively, reducing the need to borrow even further.