7 Clues You’re Spiraling Into Debt

by Rebecca Black on June 18, 2012

Money makes the world go ’round. So what happens if you don’t have enough to support yourself? Falling into debt can be crippling, and it often escalates very quickly into a worse problem if you don’t immediately address the issue. If your finances are causing you hardship, you’ll need to figure out a course of action before it becomes completely beyond your control. Hiring a financial advisor and sticking to a tightly managed budget can be effective. However, you may not even realize that debt is creeping up on you. The following clues should key you in as to whether you need to reevaluate your finances.

  1. You spend everything you get

    Some people have no concept of a nest egg, especially if they don’t make much money to begin with. Yet, spending every cent of your paycheck each pay period is a dangerous way to live. In the event of an emergency, you need to have some money set aside — live as frugally as possible to avoid living beyond your means. If you lose your job, for example, you should be able to support yourself for at least the short term until you could find another means of income. It is important to have some sort of savings account, preferably one that gains interest over time. Even if you put a small amount in each pay period, it will add up over time and provide you with some leverage in case of economic catastrophe.

  2. You don’t actually know where you stand

    If your financial ruin is so monumental that you don’t even know how much money you have or how much you owe, the problem is already out of hand. You might be in denial of your debt. Ignoring your problem won’t make it go away, so it’s in your best interest to gather up your bills and do some number crunching. If you have an idea of how much you owe, it can help you to make a budget that will slowly ease the debt over time. Don’t expect to be able to pay it off quickly. Remember to factor in things like student loans and taxes; you may not think of these things as frequently as your more pressing bills, but they will still drain your wallet.

  3. Your account is overdrawn

    There are few things more embarrassing than a rejected credit card, but if you’re at the end of your rope, you may be acquiring overdraft fees on a regular basis. Seeing the “not sufficient funds” status pop up when you swipe your cards means it’s time to sit down and seriously consider what you can do about your financial situation. For some, a credit or debit card doesn’t feel like real money. It is so convenient that it’s easy to forget it’s not a bottomless pit of money. It may help to withdraw an allowance of cash each week, since you will visually see the money being depleted with each expense. Whether you use a weekly cash allowance or some sort of budgeting app on your iPhone, some sort of damage control is necessary to keep in check.

  4. Your bills are all late

    If you’re inundated with late fees and can’t seem to get your payments in on time, you may be in debt. You might even be shifting balance transfers to different credit cards simply to avoid having to immediately pay things off. Struggling with bills can be extremely frustrating when you’re in debt, because they continue to pile up over time. Before you can acquire the money to pay the bill in full, a late fee appears, digging the hole of financial woes even deeper. If you’re paying bills late because you can’t remember to get them in on time, make it your priority to get them in, as you’re simply throwing away extra money by accruing late fees.

  5. You impulsively bargain shop

    Don’t fall for a good deal just because it’s a good deal. Spending for the sake of spending can get you in a lot of trouble and won’t necessarily leave you with anything desirable. You might be able to find amazing clearance items and clothing sales, but before you purchase them, evaluate whether or not you really need the item in question. When your finances are tight, it’s important to not only live frugally in terms of cost, but to also be aware of your wants versus your needs. If you don’t really need that scaled down designer dress from Target, pass it up. You can reward yourself once you’ve gotten a better hold on your budget and can afford to spend money on luxury items.

  6. You have a bad credit score

    You can get bad credit by not paying bills, breaking leases, and defaulting on loans, among other financial mishaps. A collection agency may be calling you, threatening your credit score. These threats are very real. If your credit score hits a low, unattractive number, you risk not being able to rent an apartment, buy a car, or even secure a job. People are less likely to trust that you will responsibly be able to pay your bills, and thus less likely to even give you the opportunity. If your credit score is already low, don’t fret. First, get your debt in order, and then address the problem of a low credit score. You can boost a bad score by opening a new credit card or two and paying down your credits.

  7. You fight over money issues

    If you have a shared income with your spouse and the two of you are in dire straits, you may find yourself increasingly arguing over your financial situation. Money is one of the most common issues couples fight over, as well as the greatest predictor for divorce, according to a study conducted by Utah State University. It’s hard not to become emotional about money and it truly can tear people apart. If you’re suffering financially, do not hide expenses from your partner. It should be a collaborative effort to patch up your debt. If you’re sneaking around buying things you shouldn’t, hiding receipts and shopping bags, you’ll wind up not only with a money problem but also trust issues between you and your significant other.

Categories: Advice, Building Credit, Monitoring Credit

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