Warning Signs

Borrowing is not bad. However, borrowing can easily throw you off track from your financial goals if you do it irresponsibly and indiscriminately, without thinking of its consequences. The sooner you identify how much debts you have, the sooner you can plan on how to get yourself off this problem which can easily turn into a financial disaster as they grow out of control.

Here are some warning signs that you may be in deep financial trouble.

At least 20 percent of your paycheck goes to your credit card bills, car loans and other debts such as overnight loans. Having this amount of debt is a warning sign that your finances is at risk and that you need to watch it or take in control of it.

You take out bad credit or overnight loans to pay off other debts. Borrowing, as mentioned, is not bad. However, when you take out overnight loans, for instance, to pay off debts all the time, this is a sign of serious financial problems. Overnight loans are designed for emergencies and not for a long-term or huge financial issues. If you have emergencies that recur quite often and you are always looking for money to deal with these emergencies, this is a sign that you are not financially prepared for such situations and chances are that you will or have incurred too much debts.

Paying bills late every month or missing payments is another warning sign that you may be in too much debt. When you always don’t have the money to pay for your bills, which you should have budget for, means your financial obligations may be bigger than your income.

You only make minimum payments on each bill. If this happens all the time, then your debt or financial obligations are larger than what you have or earn.
Being refused to get good credit loans because of defaulting payments on previous loans. This is a sign of a poor borrowing attitude that can attract a lot of financial repercussions.

Using credit cards to pay monthly bills. The payment for your utility bills should come from your income, not from a borrowed money. When you have to borrow to pay your monthly bills, you need to evaluate your finances, identify your debts and start planning on how to pay them off.

You have difficulty paying for your basic needs. If you always run out of money to buy groceries and gas then chances are that you are in big financial problem. Your money probably goes to other bills.

After assessing how much you really owe, implement debt management techniques to reduce your debt and pay it off as soon as possible. This may include cutting down on your expenses by buying less, prioritizing your debts by paying off high interest loans such as overnight loans, and finding ways on how to stop running up new charges. You should also talk to your lenders about alternative repayment options for your situation.