Life is expensive. As monthly instalments and food prices go up, we have less and less control over our budgets and are forced to rely on our credit cards, accounts or overdrafts to fund the excess. A car breaking down and several medical bills just add to insult to injury, and before you know it you are in over your head. Debt can very quickly become a vicious circle that repeats itself month in, month out until you feel there is nowhere out anymore. There is hope however, you just need to know when to ask for help.
The following 11 signs indicate that you could be over-indebted and may need debt counselling as soon as possible:
1. You’ve maxed out your overdraft/credit cards.
Irrespective of the limit of your credit card or overdraft, if you have maxed it, or even if you are nearing the max limit, it indicates that you are living above your means and you are heading for financial trouble.
2. You are behind on one or more payments.
Skipping a payment is far more dangerous than it may sound. If you are unable to pay one or more bills this month, there will be even more pressure on your finances next month. Not paying your bills can lead to a bad credit rating and could even lead to you losing an asset.
3. After you’ve made all your debt obligations, you have little/nothing left for living expenses.
If there is little or nothing left of your salary after all your debt instalments have been met, you are most definitely overindebted. And as result you might be forced to fund living expenses with debt, which will only increase your debt instalments and leave you with less and less each month.
4. You have no savings.
There is a difference between having no savings and being unable to save anything. If you have no savings due to poor financial management, you have to draw up a budget urgently and make sure you save towards retirement, your children’s education and any unforeseen expenses. However, if your monthly debt instalments are leaving you with nothing to save, you may need professional help to get you back on track.
5. You have no emergency fund.
An emergency fund should hold the total of three to six months’ of expenses as a backup. Why? Because, what if you or your spouse lose your jobs tomorrow? An emergency fund could also be used to fund any other unforeseen expenses that would otherwise tumble you into, or deeper into, debt. If your monthly debt instalments leave no room for saving towards your emergency fund, you are open to risk and may need help.
6. Creditors are phoning you to find out when you will be paying.
It’s embarrassing when creditors phone to find out when you’ll pay. And dodging their calls will only worsen the situation. If you are unable to pay or if these calls have become nothing new to you, you have to tackle the problem head on and get professional help in.
7. You are selling assets.
A massive sign that you are overindebted and heading towards a further downhill spiral is if you are being forced to sell off things you own to pay pack debt. This month you might have to sell a few odd things you aren’t using, but what about next month or the month after. Get help in as soon as possible.
8. You are robbing Peter to pay back Paul.
The saying “Robbing Peter to pay back Paul” means that you are making new debt to pay back current debt. Whether you are borrowing from friends and family or paying your clothing clothing accounts using your overdraft, all of it is very bad news indeed.
9. You are taking out payday loans.
You are on a very slippery slope if you are taking out payday loans. What makes a payday loan so devastating is that you are already giving out a salary you haven’t received yet. And once you do get paid the interest is so astronomical a single payday loan will set you back months.
10. You are borrowing from your retirement savings.
If you are dipping into your retirement savings to pay back debt you are directly taking away income from your future retired self who needs it the most.
11. Your debt is keeping you up at night.
Financial stress, much like any other type of stress, has the ability to consume all of your thoughts and keep you awake at night. If you are experiencing depression as a result of your debt – sometimes even skipping work as a result – you need help!
The sooner you reach out to Debt Rescue, the sooner we can assist your situation, create a make a plan and help you back on your feet again. We are here for you!