5 Warning Signs You Have Too Much Debt
Debt has become necessary in today’s society. Most people won’t be able to make the larger purchases in life without getting into some sort of debt. Whether it is a home, a car, or even an education, getting into debt is just a natural part of American life today. Unfortunately, the line between normal and excessive use of debt has been blurring for the past decade or so. People are getting deeper and deeper into debt, especially since rates are at an all-time low.
Slipping into excessive debt can happen almost without anyone noticing. Often times, by the time you recognize that you are in the situation, it is too late. Instead, it is important to attempt to spot the warning signs, so you can make the hard decisions while they won’t hurt as bad.
The 5 Warning Signs You Have Too Much Debt
1.Paying for groceries with a credit card. Okay, so it doesn’t have to be only groceries. Pretty much any everyday item would count. The fact is that once you are at a point that you cannot afford to pay for these items out of your normal checking account, then that means that you are either living outside of your means or that you are so bogged down with debt payments that you need to use credit simply to make these normal purchases. Either way this is a major warning sign.
2. You are paying your bills late. Another major warning sign is that you are starting to pay your bills late. This could mean a number of different things, and all of them are bad. Perhaps you are overwhelmed with the sheer number of payments and can’t organize them. Maybe you simply just don’t have enough money left over after paying the other bills. Again, these are warning signs that your debt load is simply too large.
3. You are maxed out on your credit cards. The award for most obvious warning sign goes to this one. If you are maxed out on your credit cards, then it is an obvious warning sign that you have too much debt. However, this isn’t as obvious to most people as it should be. Credit limits are established by banks based on what they feel the borrower’s capacity to pay is. If you get to a point where you have maxed that out, the typical response for borrowers is to request an increase. Provided the pay history is okay, this will usually be granted. The question is whether or not the request should have been put forth in the first place.
4. You have no savings. Expanding on earlier themes, if for whatever reason you do not have savings, or the ability to save, that is typically a warning sign that you have too much debt. This isn’t always the case though, as it could simply mean that your income or other bills, such as medical bills, is the culprit.
5. You got turned down for credit even though your payment history is great. Banks are in the business of managing financial risk. If they are declining you for credit even with a great payment history, then they are making the statement that you have too much debt, which is a clear warning sign.