4 Signs your Debt is a Problem
If you’re like most Americans, you have a lot of debt. We’re guessing that your friends and family members have a lot of debt too. For that reason alone, it can be hard to tell how much debt is normal. You probably know people who carry a six figure balance on their credit cards who seem to be doing fine, and others who owe less than $1000 who can’t pay their bills every month.
How can you know if you’re taking on too much debt? See if any of these warning signs apply to you.
1. You can’t afford to pay your bills. If you can’t afford the minimum monthly payments on your bills with the income you make, then you have to take steps to reduce your debt and/or reduce your minimum payments. Cut back as much as you can on things you don’t need. If you still can’t make ends meet, consider getting a debt consolidation loan to lower your monthly debt payments.
2. You don’t know how much you owe. If you have so many bills coming in that you just can’t keep track, you have no way of getting in control of it all. Gather up your statements and start working on a list of every debt that you currently pay. If you really can’t figure it all out, talk to a debt counselor.
3. You can’t qualify for a loan that you know you can pay. If you find yourself getting rejected for loans that you know you can afford the payments on, it’s probably a sign that your credit score is a problem. Fortunately, there are things that you can do to fix it. Paying off old debts, or lowering the balances that you carry on your credit cards can help significantly.
4. You’re getting calls from collection agencies. If you have bills that you aren’t paying, that’s a problem. Simply ignoring old debts and hoping that they will go away rarely works. Instead, take steps to start paying off these old bills and clean up your credit. Debts that are in collection have already ruined your credit, but you don’t want to risk these companies coming after your paycheck or your home.