Credit counselling, proposals to creditors, bankruptcy
Licensed Insolvency Trustee.

Six Warning Signs of Unmanageable Debt

d8887856-774c-449b-9efc-d997bc74f49b

There may have been a point in your life when you were able to manage two credit cards at once and not feel like you were in over your head. Lately, however, you’re feeling like your finances have gotten away from you, suddenly you’re overwhelmed and aren’t so confident in your ability get back on track.
What most people don’t understand is that most debt is incurred over time, typically not all at once. Unmanageable debt is a slow burn, oftentimes going unnoticed until you realize things are a little too far outside of your comfort zone.

If you feel like you’re debt is becoming too unmanageable, keep an eye open for these warning signs:

  • Late on Payments –You should have a thorough understanding of all of your monthly payments, especially the ones that accrue interest. These bills should be your top priority of where you dedicate your income. Not being able to make these payments, or only partially paying off your bills will result in late fees and even more debt piled on what you owe. If you can’t manage your payments, you can’t manage your debt.
  • “Robbing Peter to Pay Paul” – This old saying refers to needing to use credit cards or loans to pay off lesser credit cards or loans. This short term solution is accompanied by some severe long term problems. You’re basically incurring more debt and building up higher interest payments. This game offers no opportunity for progress, and eventually the cycle will end, leaving you in a worse financial situation than before.
  • Inability to Save Money – Someone who is financially healthy typically has enough back-up savings to cover between three to six months of expenses. If you find yourself living paycheck to paycheck, and can’t find a way to save money, you may be in more trouble than you realize. Consider what would happen if you lost your job or a large expense was unexpectedly put on your plate. Your entire income shouldn’t need to be devoted to bills and debt payment.
  • Overdrawn Bank Statement – Buying a cup of coffee shouldn’t add to your debt total. Paying for minor things with overdraft or credit cards is going to slowly build up, and really hit your interest payments. Your overdraft is a safety net, if you’re falling into that net often – especially for minor purchases – it’s time to seek additional support.
  • Not Knowing What You Owe – Ignorance is not bliss. Keeping tabs on your debt is the best way to manage it. Understanding what you owe and how much interest you’re accruing will help you measure spending and keep your finances from getting out of hand. If you don’t keep your finances under a microscope, you won’t notice how fast debt is building up or how big the pile is getting.
  • Burning Bridges – The most crucial sign of all is damaged relationships with friends or family over finances. Conflict is never the answer to financial problems. It might be time to take accountability for your situation and work together with those close to you who are willing to help. Commit to forming solutions instead of spending energy blaming someone else.

If any of these signs sound familiar, your debt may have become too unmanageable for you to handle. The good news is you have the resources available that will help you find the solution. Rita Anderson and Associates have been helping people overcome their financial challenges for over 30 years. We have the expertise to help you resolve your debt, and are happy to provide you with a free consultation.