How to Recognize a Serious Debt Problem
It is amazing how many people out there don't know that they are one step away from financial disaster.
So many people live by the idea that they will just charge something this one time and pay for it later. They don't see that it is building up until it is too late. I know how easy it is to get into debt, but once you are there it is hard to see that financial disaster is close at hand.
Here are four ways to tell you are in financial trouble:
1. If your minimum monthly credit card payments are more than 20% of your paycheck (after taxes), you are walking a tight line. For example, if you bring home $1000 a month, your credit card payments at a minimum should be no higher than $200. Your entire debt load, including your rent or mortgage, should be no greater than 30% of your gross income. If your gross monthly income is $1500, your total debt load should be under $450.
Many lenders will tell you that you can afford more debt. But keep in mind that they are looking to lend you money, not save you money.
2. If you have several accounts that are delinquent, you are already in trouble. Being unable to pay your bills on time is a bright, neon sign that says you have too much debt. You have to take steps immediately to reduce your spending or increase your income.
Plus, if you are charging your bills to your credit card, you are creating more debt for yourself and higher payments in the long run. This is never a good idea. There are better solutions. Find a second job or cut out the unnecessary spending. Find another way other than more debt.
3. If you can't even charge your bills because you have maxed out all of your credit cards, you are close to financial trouble. Your credit score is taking a hit as well. Lenders don't like to see you with high balances. It means that you are stretched to the limit. It can be difficult to find options, such as refinancing your mortgage to pay off high-interest debt or buying a cheaper vehicle.
Plus, if you are truly maxed out, chances are that you haven't been saving anything. What will you do if you have an emergency and have no savings and no credit?
4. This one is really creative. If you are taking out cash advances to pay your credit card bill, you aren't getting anywhere at all. You are creating debt to pay debt. You aren't even breaking even here. Credit card companies charge high fees and higher interest rates for cash advances.
If you find that you aren't able to make ends meet or that things are tight, it is time to make a change. You need to find ways to decrease your spending, eliminate your debt and increase your income. Once you get rid of the debt and the stress that comes with it, you will never go back again.
Related Tags: debt problem
Martin Lukac http://www.MartinLukac.com , represents http://www.RateEmpire.com , an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com
Your Article Search Directory : Find in ArticlesRecent articles in this category:
- Debt Settlement Programs In 2010 - Learn How To Get Your Debt Bought Out
Are you (interested in|searching for} some great information on debt settlement programs?Are you sea - Many Ways In Which A Debt Settlement Company Can Help You
Have a look at the latest figures of total personal debt in the United Kingdom. As per the reports, - Debt Consolidation Services Whats Best For You
A debt consolidation service is really a loan that is applied for to pay off pre-existing debt. Prec - Debt Consolidation Advice
If you don't know how to repay your various debts, and find your creditors chasing you for the payme - The Guide To Debt Solutions
By the end of 2009, the number of personal insolvencies that had been filed in courtrooms around Eng - What Debt Solutions Do You Have Available?
For people who find themselves in a difficult financial situation there are a number of debt solutio - Government Debt Management Help And Advice
No matter how good your money management skills are, there might come a time when you'll find yourse - Paradise Found With Debt Consolidation
Paradise Lost-Paradise Found with Debt ConsolidationIf your life and the life or your family is not - How To Consolidate Credit Card Debt?
Have you ever wondered if what you know about Consolidate Credit Card Debt is accurate? Consider the - A Very Simple Approach To Debt Reduction That Works.
Debt Reduction seems to have become fashionable and its not considered a dirty word anymore. The eco
Most viewed articles in this category:
- Help is Around With Consolidation Loans
If piling debts is a cause of concern for you, then read on to find the key to solve your problems. - Debt Consolidation Loans: it is Never Too Late to Mend your Ways
The fulfilment of desires in our lives is like mirage; the more you chase them, the more they seem t - Debt Consolidation To Avoid Further Damage To Your Credit!
So if you are beginning to miss payments or pay late and you fear your credit will get ruined, it's - Reduce Credit Card Debt by Managing Debt
Reducing your credit card debt is not easy, and requires planning and discipline. We all know that - Consolidate Debt Through a Bad Credit Mortgage
How can anything called a "bad" credit mortgage be considered good? You would be surprised that it - Debt Consolidation Loans - Bring your Finances Back on the Track
Debt consolidation loans enable one to pay off all his debts in one go. It is an option to merge all - Take Advantage of Credit Card Debt Counseling and Get Rid of Your Debt
We all know how credit card debt can creep up on us. The credit card companies are only too happy t - Time Share Your Way Into Debt
Cancun, do you want to live here for a couple weeks a year? Hey if you want to learn how come attend - Roll your Debts Into a Single Manageable Debt With the Debt Consolidation Loans
Are you deep into debt but clueless on how to get out of it? Are you losing your nerves keeping trac - Debt Consolidation - Is it Right for Me?
Many people search for a way to bring life back into their finances and relieve their ever growing