The Warning Signs of Debt Problems

Many people worry about going in debt and owing more money than they can afford to pay off. Sometimes, however, it's not immediately obvious that you're heading toward a dire financial situation, because it's easy to get caught up in borrowing and spending without realizing the dangers. You should remember a few things to watch out for in order to avoid debt distress.

Credit Card Relations

If you're heading toward debt overload, your relationship with the credit cards you own will change. While many people find that they utilize their credit cards often but pay back a healthy amount when required to do so each month, individuals with looming debt problems often pay back only the absolute minimum they have to do on a monthly basis. Another warning sign is being consistently late with credit card repayments.

Borrowing Money

Individuals with debt problems don't just have an over-reliance on credit, but also find themselves borrowing money excessively, creating an ever-increasing spiral of financial difficulty. If you've had to look to other methods of borrowing just to settle existing debts, or are borrowing money from a source without a set date by which the repayment will be made, you're likely to have a debt problem. A particular warning sign to watch out for is if you're asking for money from loved ones, such as family members, because such loans are likely to be easier to avoid repaying than loans from a bank, for instance.

Credit Spending Addiction

For some consumers, the clearest warning sign of an approaching debt problem is an addiction to spending on credit. While there's no problem at all with using a credit card occasionally for shopping, especially for larger purchases, you should watch that you're not using credit for cheaper items such as everyday essentials, for toiletries and groceries for example. Another sign of an issue with credit spending is that you come to view your credit cards as a source of extra income, rather than a type of loan that eventually needs to be paid back. You might also find that you're constantly looking for more credit, leading you to take out more credit and store cards or to contact card issuers to check your credit levels.

Minimum-payment Syndrome

Many people will get into a little debt during their adult lives, which isn't too much of a problem, as long as they can tell when such debt goes above a safe level. According to the MSN Money website, if your total debt equals more than 20 percent of your actual earnings, you may be looking at a problem.