5 Warning Signs That You Have a Debt Problem

Identifying the early stages of a debt problem is very important if you want to avoid your financial situation spiralling out of control. A potential debt problem will never go away on its own, and that is why we have compiled a list of 5 warning signs that may indicate you are heading towards one.

You Are Unaware of How Much You Owe

If it has got to a point where you are not checking your credit reports or account statements and you have completely lost track of the amount of debt you owe, you are running the risk of your financial situation deteriorating.

If you have more than one credit card, for example, do you know how much you owe towards each of them to pay off the total balance? If you do not have answers to simple questions like this one, it is time to face up to your financial reality.

You Are Only Making the Minimum Payments

Although making minimum payments is better than missing payments – which triggers late fees and higher interest – it still signifies that you are struggling with debt. Making these payments is never a long-term solution; instead, it will merely keep your head just above water whilst interest racks up.

 You Are Unable to Build Any Savings

Placing money into a savings account every month should always be a part of your budget plan. If you are unable to put any money aside after you have paid your monthly bills, this could be an early warning sign that your finances are in trouble.

The same applies if you have drained your savings accounts to pay off some of your debts. Without a financial cushion of some sort, if something goes wrong unexpectedly (e.g., you need to pay for an operation for yourself or a loved one) or you have a sudden decrease in income, you could be in real trouble without an emergency fund.

 You Are Borrowing Money to Pay Back Your Debts

Whether you are using a loan from family, friends, credit cards, or cash advances to pay your bills, it is obvious that you have a debt problem. Indeed, borrowing money might delay the problem but you will have to face up to it at one point or another.

Many people start out with a balance transfer – transferring outstanding balances on one credit card to another with a lower interest rate – and then perhaps choose to refinance their homes to pay off debts. Both scenarios are warning signs.

Equally, relying on cash advances is a serious red flag. Cash advances often come with high one-time charges as a flat rate or a percentage of the amount; therefore, they should be avoided at all costs and only be reserved for genuine emergencies.

Your Financial Problems Are Affecting Your Personal Life

According to a website poll, 44% of respondents said that they fight about money with their spouse on a weekly basis, whilst over 70% of respondents said that financial stress affected their health.

As soon as your financial issues have started to cause mental health problems, insomnia, or they have begun affecting your personal relationships (e.g., you are trying to hide it from your partner or it is actively causing conflict between the two of you), your debt has now become a problem.

Taking Action Against These Warning Signs

The sooner you take preventative action, the greater your chances are of avoiding your financial situation spiralling out of control. If you feel like you are unable to manage your debts or you are unsure about the best way to do so, you must seek professional advice. Recognising these warning signs in the first place is the most important step in the process of repaying debts.

If you are worried about debt, bankruptcy or possible personal insolvency, contact Asset Solutions today on 0800 689 3861. Our experienced team members provide unrivalled assistance to individuals throughout the entire insolvency process and help to stop bankruptcy. We understand that anyone facing problem debt is likely to feel overwhelmed and intimidated. That’s why we’re here to support you throughout the process and help you achieve the best results possible for your situation. Contact us today for more information.