Do you worry about Debt? Wake up at night or can’t sleep because of Debt Accumulation?
Wonder how did I get here?
If you answered YES to any of these questions let’s get into it and explore the 20 early warning signs.
Hiding from your debt doesn’t make it go away. In fact, if you’re purposely ignoring your debt, you may suspect that you have more debt than you can handle.
In fact, according to a 2021 Experian study, the average American carries $96,371 in consumer debt.
At the end of 2021, American household debt topped $15.58 trillion.
Take a moment to learn how much debt you should have
If your debt-to-income ratio (DTI) is higher, it may be time to explore debt consolidation loans or other debt relief options, like credit counseling or debt settlement, to handle your overwhelming debt load.
There are traditional measuring sticks to help consumers decide if they’re in, or nearing, trouble.
One of the key indicators is your debt-to-income ratio: Add your monthly debt payments (credit cards, car and/or personal loans, mortgage or rent), then divide the total by your monthly gross income. Multiply by 100 and, voila, there’s your DTI percentage.
If your monthly income is $3,000 and your monthly debts are $1,000, your DTI would be 33 percent ($1,000 / $3,000 = 0.33). That is a good number and isn’t considered too high by lenders.
Traditionally, a DTI up to 28% is considered healthy. But if your DTI includes making no more than minimum payments against your credit card debt, you don’t need us to tell you there’s a problem.
The Consumer Financial Protection Bureau recommends you keep your debt-to-income ratio below 43%. Statistically, people with debts exceeding 43 percent often have trouble making monthly payments.
Here are the 20 Early Warning Signs of Debt Accumulation:
- Hard time paying bills timely
- Receiving collection calls or past due notices
- Living in your overdraft or line of credit
- Losing sleep worrying about debts
- Spending more than your income allows
- Not paying credit cards in full each month
- Impulsive spending due to financial worries
- Hiding spending or debts from a partner
- Allowing bills to stack up because you can’t pay them
- A decline by your financial institution to consolidate your debts
- No budget or spending plan in place
- Feelings of hopelessness that you’ll never get out of debt
- Overdrafts in your bank account
- Denied Credit
- Using Credit Card Cash Advances
- Emergencies
- Making Only Minimum Payments
- Balance Transfers
- Avoidance
- Lying About Money
Debt is NOT a forever. Take a small step everyday to move forward paying debt!
Final Thoughts on the 20 Warning Signs You Have a Debt Problem
If you are experiencing some of these warning signs and are wondering what your next steps would be, I suggest you speak with a non-profit Credit Counsellor. Most non-profit Credit Counsellors can provide you with confidential, non-judgmental coaching about your situation for free or for a very small amount of money.
Non-profit Credit Counsellors can lay out all of your options for you and then let you choose what you think is best.
When debt gets out of control, it affects your everyday life.
When you get to the point where opportunities pass you by and you’re constantly thinking about those high balances, it’s time to take action.
Life is both too short and too long to live with crippling debt.
Evaluate how you got here and make a plan that once you are out of debt you stay out.
Changing your habits, mindset and goals will give you the continued success that you need.
Additional Reads: Early Warning Signs You’re Carrying Too Much Debt (moneymanagement.org); Get out of debt. Have fun along the way. | JackieBeck.com
