When is Debt a Problem?
Despite your best efforts, does your debt load continue to grow? How do you know when enough is enough and your debt is a problem?
When should you consider re-thinking your finances and maybe seek some help?
Maximum Effort, Minimum Payment
You are squeezing each last cent from your paycheque to meet your credit card payments, yet you are not making any sort of impact.
This is likely because you are only making minimum payments, which will keep your credit in good standing, but will do little to actually erase the debt. That is because of those pesky interest charges.
Is your plastic still getting a workout, even though you have committed to paying down your debt? This may be because a lack of commitment to the goal, or it may be the consequence of a constricted cash flow, squeezed out by debt requirements and mounting debt load.
Why are you unable to keep your card in your wallet?
Cash Advance Treadmill
Are you taking cash from one card to pay the minimum on another? Talk about short term gain for long term pain!
Again, this is the result of too much debt, and not enough cash flow to service it.
How many cards are at (or near) their limit?
If you are near the limit, and without much cash to rely on, what will you do in an emergency (i.e. car repairs, home repairs, etc.)?
It’s always necessary to have a cushion, and if your debt load is substantial, you might be painting yourself into a corner.
Balance Sheet Imbalance
How big is the gap between your total savings and the debt load you carry? If you haven’t accumulated any (or very little) savings to speak of, you may want to rethink your debt situation.
Finances Cross the Line
Does your debt situation drift into your personal life and relationships? Does it cause stress and sleepless nights, or cause friction between you and those who matter to you?
Money management should give you a sense of control, not the other way around.
If your credit was removed, would you be able to afford your living expenses? If not, this is a sign that you are living beyond your means.