“Not until the pain of the same is greater than the pain of the change will you embrace change.” – Dave Ramsey
Most people who are in financial trouble are aware of it but often, we live for a long time in denial about how bad things actually are. Like quicksand, debt tends to trap you slowly over an extended period of time; pulling you steadily deeper until eventually you’re up to your neck. I’ve written before about my own journey into the debt hole and out again, but every time that I look back on that journey, it amazes me how slow I was to pick up on the signs that my financial situation was out of control. I chose denial over action for far too long and, like many people who wrestle with debt, it was only when life threw me a series of particularly nasty curve balls that it became impossible to deny that I was in over my head.
If you suspect that your debt is out of control, there’s a really good chance you’re right.Finding solutions to eliminate overwhelming debt
If you’re not sure (or you’re wanting to convince someone who’s in denial) then take a look at the following list of debt “red flags” and see how many apply to you:
1. There’s More Month than Money
We’ve all had those months where we get hit with a few unexpected expenses or indulge ourselves a little too much at the mall and the balance on our bank account gets close to a negative balance. If this is a rare occurrence for you then it’s easy to fix by making your savings plan a little more aggressive so you have something to fall back on. However, if you are regularly running low on money (or running into overdraft) in the days before payday, then it’s a clear signal that you’re in the danger zone.
2. You’re Only Making Minimum Payments on Debts
The reason that debt is so profitable is that most people don’t pay off their balances in full every month and so lenders can charge large amounts of interest in exchange for extending us credit. Too many people believe that, as long as they can fulfill their minimum payment obligations every month, then they’re ok. The truth is that, if you need to rely on credit in order to make ends meet, you’re already at least ankle deep in debt “quicksand”.
3. You’re Being Hit by Bank Fees and Penalties
One of the worst things about struggling to make ends meet is that you tend to get hit with penalties and charges that make it even harder to get ahead. I remember so many times when I was thrown off course by a single NSF fee that triggered a domino effect of other penalties, leaving me hundreds of dollars in the red all because of one small amount (usually less than the NSF fee) that I didn’t have the funds to cover. If you’re routinely being hit with NSF fees and other penalties, it’s time to get serious about your situation and to do whatever you can to even it out and recover some ground financially.
4. You’re Behind on Your Bills
The trouble with falling behind is that it becomes increasingly harder to get caught up. You fall into a cycle of “living in reverse” where you’re constantly borrowing from future expenses in order to get caught up with past due bills. By the time payday rolls around and you’ve paid off everything that you’re behind on, you don’t have enough to cover your current bills and so you wait until the next payday when the cycle starts all over again. Soon enough, you’re permanently behind and then it only takes one significant unexpected expense to shatter the illusion of financial stability you’ve been trying to create and bring everything crashing down around your ears. It’s not fun. Not fun at all.
5. You’re Borrowing in Order to Pay Bills
Most of us have been in a situation where we’ve needed a helping hand financially to get us out of a tight spot. However, when you’re regularly borrowing money to pay bills and other expenses, you’ve just added another layer to the concept of “living in reverse” and, without a significant increase in income, it becomes really hard to get caught up. Borrowing can take many forms, but whether it’s an increased reliance on credit, a payday loan or a loan from a friend or family member, it’s still a red flag.
6. You’re “Recycling” Debts to Stay Ahead
Recycling debts simply means using one form of credit to pay off another. For example, putting enough money onto a line of credit or a credit card to cover the minimum payment and then using that line of credit or credit card to pay another bill. Aside from being incredibly stressful, it doesn’t take too long to reach a point where you’re constantly at or over your limits and risk having access or having the account frozen. If you need to borrow in order to cover your expenses, you’re well into the financial danger zone and it’s time to step up, take a realistic look at your situation and determine how you can turn it around.
7. Debt Collectors are Calling
When I first started dating my boyfriend, he used to tease me about the fact I would use my phone to text or email him but never to actually call him. The truth was that, after spending years avoiding an avalanche of calls from debt collection agencies and accounts payable departments, I’d grown to hate talking on the phone; just hearing it ring would make my stomach drop and I rarely called anyone. If you’re being bombarded by calls from organizations looking for money that you owe, it’s time to get professional ,impartial advice from a debt counsellor or other professional who can help you figure out what your options are and help you determine the next steps.
We live in a society that is built on borrowing. A society that encourages us to spend and that makes it all too easy to spend money we haven’t earned yet, on things we don’t really need. When you consider that we don’t teach money management in schools and we don’t educate people about credit or debt before we offer it to them, it’s hardly surprising that people fall into the debt trap and get stuck there. However, when it comes to debt, ignorance is definitely not bliss and we owe it to ourselves to get educated, get irritated about our situation and take action to change it.
I’m proof that it’s possible to dig yourself out from under a large mountain of debt and there are plenty of other people with stories that are much more inspiring than mine. If you’re in the financial danger zone there is a way out and there are people willing to help you find it. All you have to do is ask for help.