Debt problems are as real as the stress and anxiety they cause. When left unresolved, debt issues grow worse with time. They can detrimentally affect your physical and mental health, take a toll on your relationships, and make it even harder to manage your finances.
On the other hand, early intervention can help you regain control of your finances and prevent you from spiraling into exorbitant debt. In some cases, it may even be possible to write off a significant percentage (up to 90%) of your debt. That’s why it’s always better to get debt help as soon as you begin noticing the red flags.
Contrary to what most people believe, your level of debt (the total amount you owe) does not say much about whether you have a debt problem that requires professional help. Some people can effectively manage high levels of debt while others may struggle with smaller debts.
Seeking debt help makes sense when you are certain you will not be able to repay the amount you borrowed, regardless of your debt level. If the debt is beginning to affect your life or you have been struggling to pay your monthly bills, you may have a debt problem.
Here are more signs that will help you decide whether you have a debt problem that requires immediate attention. If you have been experiencing these red flags, do not ignore them, and seek debt advise from a professional:
Stress and Anxiety
If you are thinking about your debt, expenses, or finances throughout the day, you may have a debt problem. Everyone who borrows thinks about debt repayment and stress is a natural response to difficult situations.
However, if debt-related thoughts are keeping you up all night and you are finding it increasingly difficult to focus, it’s a sign that financial woes are taking a toll on your mental and physical health. It’s time to get debt help and resolve your financial issues.
Ask yourself if you have been checking your bank statements less frequently off late. If you have been avoiding your bank statements because they show more money going out than coming in, you may have a debt problem.
Ignoring it will only make your financial situation worse so it’s better to talk to a debt advisor and work through your options with them.
You should check your spending if you have been struggling to pay for basic needs like food, accommodation, and utility bills. Talk to a money advisor if you are having a hard time meeting your everyday expense.
Begin tracking your monthly expense if you are not already. One look at your budget will show you how much you’re spending and earning. If you are spending more than your monthly income, you may have a debt problem in the making.
One reason you may be struggling to pay for food and utilities could be your interest-to-income ratio.
If the monthly interest you pay on top of your debt is more than 20% of your total income, you are paying too much interest. A debt advisor will help you find a solution that suits your individual circumstances better.
Calculate your total monthly debt payments by adding all your debts including credit cards, loans, and mortgage or rent. If your debt payments are more than 40% of your monthly income, you should reach out to a money advisor.
Have you been borrowing from friends or family? If so, you would have to pay these debts back eventually. That might be alright if it’s a one-off but borrowing frequently can interfere with your existing debt repayment plan and cause serious financial problems.
If you have no other option but to borrow more, you should take immediate steps to tackle your emerging debt problem and discuss your situation with an advisor.
If you are in debt and you have already exhausted your savings to pay your debt, bills, or essential expense, it may be a sign that you need to take charge and plan to avoid future debt issues.
If you use a credit card, check if you have been paying the full balance every month. If you haven’t you may have developed the costly and unsustainable habit of paying the minimum balance.
If you carry on in this way, you may end up paying more than the actual product price since the interest-free period may end before you pay off the balance.
Delayed Bill Payment
Are you always late at paying your bills? If so, it could be a sign that you need to be budgeting properly and re-assess your spending patterns. Ignoring bills can cost you more since bills tend to come back with additional charges.
If you have been receiving calls, letters, and emails from your creditors or a debt collection agency too frequently, do not ignore them. Instead, get debt help from an advisor who will guide you further.
Need Debt Help?
If you or your loved ones are struggling to repay their debts or regain control of their finances, Money Advisor is here to support you. Get in touch with our friendly and impartial specialists for resources and timely support.