There’s nothing wrong with having debt. In fact, having well-controlled and healthy debt can do wonders for your credit score! However, there’s no doubt that debt can be hard to manage and you may not even know you are in a tight spot until it’s too late.

Before your debt completely gets out of control, here are some signs to look for so you know when it’s time to get help.

1. You’re Only Making Your Minimum Payment

While minimum payments are relatively low, they do nothing for paying down the actual balance of your debt. When you only meet your minimum obligations, you are covering the cost of interest and barely touching the principal amount owed.

If you can’t make more than the minimum payments, you’ll end up keeping yourself in debt.

2. You Rely On Your Credit Card for Regular Living Expenses

Ideally, credit cards should be used to make purchases that you can immediately pay off – or for emergency situations.

However, if you are using your credit card for regular living expenses, this is not sustainable. Using our card for things such as groceries, rent, or mortgage payments is only going to keep you buried in debt.

3. You Pay Your Credit Cards with Other Credit Cards

When it comes to healthy finances, you can’t rob Peter to pay Paul. If you’re using one form of credit to pay for another on a regular basis, you need help with your debts.

However, it can be helpful to pay off higher-interest debts with lower-interest debts to save money – but only if you don’t intend on using the high-interest account.

4. You Can’t Follow a Budget (Or Don’t Have One)

Not many people can say they love to budget but budgeting is an invaluable tool when it comes to managing your finances or debts. If you don’t have one, or can’t bring yourself to follow one, you could end up in a bad spot.

Budgets are not about limits and going without – having one is all about being aware of where your money goes and doing what you can do to stay on track financially.

5. You Have No Savings for Unexpected Expenses

It’s likely that the last thing on your mind when you are trying to tackle your debts is establishing a savings account. However, having one is important so that you can cover emergency or unexpected expenses without having to rely on your credit. 

Otherwise, you’ll simply turn to the credits you’ve been trying to pay down and end up increasing your debt.

6. You Are Spending 20% Or More Of Your Income on Debt

If you find yourself spending 20% or more of your income each month paying down your debts, there is a serious problem. And it’s not that you are not trying – it’s simply that you have more debt than you can handle.

In this situation, it’s best to speak with a financial advisor to explore the best options when it comes to addressing your debt. There are programs and services available that can help you better manage your debt and take some strain off your budget.

7. You’re Relying on Payday Loans

Payday loans are loans that you can borrow and pay back once you get paid, hence the name. However, with interest rates as high as 400% per year, even small debts can spiral out of control.

If you find yourself not able to make the payment on time, you may be tempted to take out another payday loan to pay the previous one – this can lead to multiple loans with frightening annual interest rates.

Whether you are struggling with debts and relying on payday loans, or you are hitting a rough spot and considering one, this is a sign that your finances need some help.

8. You’re Ignoring the Problem

Debt is not an issue that will simply go away – unless you want to face a terrible credit score for the years it takes debts to leave collections. Throwing unopened bills in the mail or continuing to spend like you don’t have an issue are sure signs that you truly do.

While money and debts are mathematical, there is definitely a psychological component as well. Facing your financial struggles is stressful and dealing with them can help alleviate the anxiety in your life.

How to Get Help For Your Debt

If any of these signs resonate with you, it’s time to start taking control of your debts and finances – and you don’t have to do it alone!

Here at Frederick & Company, we are dedicated to finding the best solutions to your unique situation. We want to take the time to get to know you, your struggles, and your habits so that we can get you on the path to financial freedom!

If you’re ready to talk, we’re here to listen! Contact us today!