There has been an increase in the number of people going into debt since unemployment rates have soared. There are many signs of debt problems that can be noticed before you hit rock bottom. Noticing these signs of impending debt gives you time to readjust your budget and sort out your finances before you are in real trouble.
Credit card overuse
Credit cards fool people into thinking that they can buy the latest Chanel bag or Dior watch. If you are one of these people that loves the latest fashion or gadgets then you may be running the risk of going into debt. The fact is that credit card overuse leads to soaring debts. If you cannot afford to buy something, then do not buy it. Each month your credit card bill will increase, as will your minimum payment. Only paying back the minimum payment leads to more interest being added each month, and even greater debt. Think what may happen when you cannot afford to pay the minimum payment each month. You will likely try and get a loan to pay back your credit card. As your credit score will be taking a battering due to evidence of poor credit you will struggle to get a loan, and any offered to you will have high interest charges. If you are subject to impulse shopping, create a monthly budget, and set aside some dollars each month for impulse buys. If you wish to purchase an expensive item, save up two or three month’s impulse spending money. If you cannot resist using your credit card then cut it up.
Late Bill Payments
If you struggle to pay your bills on time or buy food then you may be heading into debt. Late bill payments can result in your phone line being disconnected, your gas supply being turned off and your electricity being cut. These are essential items that you cannot be without. If you find that you do not have enough money at the end of the month for grocery shopping or bill payments then you need to draw up a monthly budget. This should include a list of all incoming and outgoing income. Small changes to your monthly budget can lead to large sums of money saved. This money can then be used to make sure bills are paid on time.
If your bank balance is at zero a few days before payday you run the risk of going into debt. If you need to use your overdraft each month to get by you will eventually overspend and be in debt. Each month a budget should help make small savings on impulse spending, and other luxuries. This sum of money could then be saved into a high interest bank account and used for emergencies or treats such as summer holidays.
If you notice you have signs that you are fast approaching being debt ridden then now is the time to make lifestyle changes. If you act sooner rather than later you may prevent your house being repossessed. Taking charge of your finances is not as hard as you think and can be achieved with a monthly budget and some minor lifestyle changes.