When dealing with finances, there are sure to be more than a few bumps in the road. However, what happens when these bumps become mountains? …. and better yet, how do we pinpoint exactly when our debts have been become a serious problem?
In order to determine when your debts are becoming a problem, and hopefully before they get too out of control, there will definitely be signs along the way that you will want to watch out for.
Here are 4 Signs that Debt Could be Dragging You Down.
1) You are Avoiding Opening Your Bills
Do your bills arrive in the mail or online and you turn a blind eye to them? If so, this is definitely a sign that you are avoiding your debt. Even if it isn’t a lot of debt in the beginning, by continuing to do so, this is a sure fire way that your debt will become out of control.
If you are exhibiting this behaviour even occasionally, the reality is, that this is likely to become an ongoing and dangerous habit. As this pattern continues, what you are also going to experience is the fact that your next month’s bill will arrive before the previous month’s bill has even been paid off. This negative cycle is only likely to continue, and lead you down a debt-filled path.
With this being said, if you can catch yourself doing this in the beginning and if you can identify this behaviour as a sign of impending debt, then you can halt the growth of debt in it’s tracks before it becomes far too unmanageable for you.
2) You are Avoiding Checking Your Balances
In addition to not opening your bills, you may also not be keeping an eye on your account balances as closely as you should. Not only might you not be checking these accounts on a regular basis, you may not be checking them at all. Why would someone not check their balances? Well, this is another form of financial avoidance, that can be another major red flag that debt is becoming an issue.
If this is the case for you, then you should pay close attention to this sign and take action as soon as possible. Your first step, despite how painful it may be, is to log into your online banking account and take note of your different balances. Here you will also want to identify where you are spending your money, perhaps even the areas where you have been overspending.
The sooner you acknowledge these balances, the sooner you can identify how bad the issue really is. Again, however, it is ideal that you will be able to identify this behaviour before it goes on for too long. What you will want to do next is to take control of your debt – whatever it is, before it becomes much worse.
3) You Are Consistency Making Late Payments
A third indication that your debt may be spiralling out of control, is if you are consistency behind in your payments. With multiple bills and monthly payments to make each month, this can certainly become daunting for any borrower.
In fact, as your debt continues to grow, you may be more prone to making late payments or even missing payments on a more regular basis than what might be considered ‘normal’. With that being said, if you have fallen behind and missed even one payment, this can lead to a reduction in your credit score.
Moreover, missing one payment can lead to missing another, and another and this pattern will also signify that debt has become a very detrimental part of your life. At this realization, this is a behaviour you will definitely want to monitor very closely and reverse immediately.
4) You are Applying for Credit Too Frequently
One final sign that debt is taking its toll on your finances, is if you are seeking out additional credit too often. While, of course it is common to apply for more credit from time to time, there can be instances when borrowers apply for credit far too regularly for their own good.
As you may probably know, when you apply for credit this action is noted on your credit report. Your credit report contains important details about your credit history and directly impacts your credit score. In turn, your credit score plays a large part in your ability to obtain future credit.
So what happens when someone applies for credit too often? When you fill out a form for additional credit, whether this is a credit increase on a pre-existing loan or a new form of credit, this gets flagged by the creditor. This may not only be a sign for you that your debt is becoming an issue, but it will also indicate this to lenders.
Ultimately, this situation can be a sign of a borrower’s inability to manage to pay back the credit they currently have. As a result, a borrower may be declined the additional credit, and/or experience a drop in their credit score. Both scenarios, are both a negative outcome and reveal a bad credit situation is a real possibility, if not already a reality.
In the end, if any of the above mentioned behaviours seem familiar to you, then you want to ensure you do not turn a blind eye to them as they are a likely sign that debt has or is about to become a huge burden in your life. That said, you can do something about it. You can start to manage your finances with your eyes wide open.
Begin to change your financial management habits. Look for solutions to your debt problems, and if you can’t do it on your own, ask for help! Whatever you do, do something now . . . choose to be proactive over avoidance and don’t allow your debt to drag you down any longer.