Attempting to control any kind of debt is no walk in the park. The only thing you can know and probably already know of is that it is important to devise strategies to curb things before it gets out of hand. Understanding the ways and means to manage your debt is important to paying off debt and attaining financial success.
While all kinds of debt can prove to be cause for concern, when it comes to personal debt, it is even more stressful because this kind of debt refers to the outstanding debt of consumers as opposed to businesses or governments. However, certain times prove to be slightly more alarming than others in your journey to repaying your personal debt. The experts at AC Waring hereby present some of the common stress indicators as per their experience for a personal debt that needs the attention of an expert.
When you are denied further credit
This is an issue you seriously need to pay specific attention to. When you apply for credit, the lender generally runs a brief but thorough check on your credit report and score. This gives them an idea of the type of risk you represent. With a low credit score showing up as well as a credit report filled with missed or delayed payments, the lender gets the impression that you are not capable of paying the money back. This leads to a situation where you are denied credit. Before matters reach this stage, it is important to take the help of experts on how to go about from here.
When you have too many cards in your name
It is a well-known fact that too many credit cards are sure to inevitably lead to too much debt. Ask yourself, when was the last time you had a zero balance on your credit cards? Say you are given one year, would you be able to pay off your combined credit card debt? If you are not sure or are incapable of paying it off within the specified period, then you are probably on the road to trouble.
Take a look at your high debt to income ratio
Pay close attention to your debt to income ratio. This generally measures the amount of debt against your income. This gives your lenders an idea of whether you have and what it takes to afford repayments. Understanding your high debt to income ratio (DTI), involves first taking a look at your mortgage or rent commitments. Divide your total monthly debt obligations by your total monthly gross income.
When do not have the means to deal with emergencies
Emergencies cannot be helped. If they happen, they happen. The problem arises when individuals do not possess the ways and means to pay for emergency auto repairs or even medical expenses. This can mainly be because their credit cards have maxed out, and a majority of their earnings are as a result ending up in debt repayments. This is an indicator, and the only way you can tackle this is by having an emergency fund or at least an open line of credit for these situations. After all, you never know when an emergency can arise, so it is best to be prepared.
When overspending gets out of hand
You do not need us to tell you that overspending without any consideration of your current finances is a sure shot indicator that is going to wreak havoc with your personal debt situation. After all, debt basically is an outcome of spending more than you make. If you don’t set and stick to a budget day in and day out, you can land up in a tricky situation more often than not. While the most common solution to curb this situation is to reduce your expenses and devise plans to make more money, many people cannot stick by these rules.
If you always end up paying overdraft fees
If you, of late, have been noticing that you are constantly paying fees for overdrawing your checking account, it is an indicator that you need to take your existing lifestyle down a notch. Paying overdraft fees can be a result of many elements; however, whether it is a result of a lack of responsibility, education, or overall financial discipline, get in touch with a professional if things go out of hand.
It is always better to steer clear from these real-life scenarios that can lead to potential but real life and grave debt issues. So there you go. These are a few but certain instances that can indicate you are on the road to personal debt. Whether you are on the way or are already in this situation, see that you get in touch with well experienced, nuanced, and proficient experts who come with the necessary skills and experience to help you out in this situation.