If you have experienced one or more of the following situations, you may have too much debt to handle on your own:
1. You have started making only the minimum payments on credit cards.
It’s best to pay off, in full, your credit card balance each month. The reason why you only make the minimum payment can vary. However, if you make payments that are less than your interest rate, your debt will grow rather than shrink. At that rate, not only will it take you years to pay off your debt, but you will end up owing a much larger sum than the one you borrowed.
2. You have no savings or emergency funds.
If you fail to save any money but use it to pay off (after general household expenses) extra incurred debt, you aren’t building any savings. That means if any unexpected expenses crop up, you will be unprepared to handle them and sink further into debt.
3. You use credit cards to buy essential items like food.
This is a sign that your other expenses are out of control or your income is not enough to support your ordinary living expenses.
4. You have more than two or three major credit cards.
You shouldn’t try to pay for things by building up more debt on a new credit card. It just compounds your debt.
5. You have high interest rates and often pay late fees.
This is a sign the credit card company is concerned about their risk of not being repaid. When a credit card company does this it is a sign that your credit worthiness is declining along with your credit rating.
6. You write checks without being sure if they will clear.
You are no longer on top of things. It’s hard to have a stable lifestyle when you’re always worried that your payments won’t go through.
7. You bounce checks.
You can easily damage your reputation with business associates, your bank, and others when you bounce a check. And there are additional fees attached to NSF cheques. Often banks will cancel your overdraft privileges as a result.
8. You don’t know, or don’t want to know, how much debt you really have.
You should always be aware of how much debt you have so you can devise a strategy to pay it off. Not knowing is only a comfort in the moment – you are sure to have greater problems in the future.
9. You take out cash advances to pay other bills.
You are taking out more loans to pay off other debts. This is a sign that your current financial plan is no plan at all. The ship is sinking.
10. Your credit card has been declined when you try to make a purchase or loans are being denied.
This is a sign you’ve reached your credit limit. You cannot borrow any more money to pay for purchases, which means you need to find a new solution to your debt. And that does not mean incurring more debt!
11. Collectors call you about unpaid bills.
One of the most stressful things about being in debt is the constant interruption at home and at work by your creditors. They want to be paid back. Wouldn't you? The need to fulfill your obligations and the anxiety of not doing so, or not knowing what to do, increases your debt stress.
12. You owe money to friends or family members.
Once traditional sources of money dry up (banks, credit cards), you may turn to friends and family to help you pay your bills. This is usually a bad idea, as it can permanently damage your relationships. Your credit rating sewers with them too!