Waiting too long to take radical measures against an inflating debt measure can cause financial distress that can range from a simple delinquency to bankruptcy. In all instances, an escalating debt problem is not an easy-to-fix trouble so do not expect easy or quick fixes. As soon as you realize that debt burden overpasses your financial capacity you must act upon it either by carefully structuring a financial plan and/or requesting the help of a financial expert.
The following warning signs of financial trouble should set the alarm:
1. You don't have any savings or liquid investments.
2. Your credit card or debt balances are rising while your income is decreasing.
3. You make minimum payments or even lower than minimum payments on your
credit cards.
4. You take out cash advances on your credit card to pay other bills or
credit cards.
5. You are near or at the limit on each of your credit cards.
6. Using costly unsecured lines of credit on a month to month basis.
7. Your credit cards are no longer used for the sake of convenience.
8. You use credit cards for things you used to buy with cash, such as groceries
or gasoline.
9. You don't know your outstanding debt amount.
10. You have received phone calls or letters from collectors about delinquent
bill payments.
11. You've been denied credit.
12. You bounce checks.
13. You have more than three major credit cards.
14. You are hiding the true cost of your purchases or your outstanding
debt balance from your spouse or family members.
15. You are dipping into savings, investments or your IRA to pay your monthly
credit card bills. 16. Debt burden is causing you anxiety and increased
stress.
Realizing or admitting that you have a credit problem is essential for solving it. A careful and comprehensive analysis that might be greatly facilitated by a credit counselor includes current savings, monthly income streams, fixed and variable costs, outstanding debt balances and the mixture of income and debt portfolio. Taking action imminently is also pivotal to the success of your financial turnaround however keep in mind that panic is always a bad advisor.