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Signs Your Debt Is out of Control and How to Fix It

Some kinds of debt are normal, perhaps even necessary to maintain healthy finances. Cyclical debt such as a mortgage and line of credit that is paid in full each month can help boost your credit score. And credit card loyalty points can be leveraged in a variety of ways. But once debt becomes unmanageable it can quickly put a dent in your plans for retirement. 

As a continuation of our series of guest posts, in this post, Good Nelly reveals the signs that your debt is spiraling out of control as well as ways to alleviate your financial stress.


1. You cannot pay more than the minimum payments on your credit cards

Paying the minimum (or less) on credit cards is one of the most obvious signs that you have a debt problem. By only paying the minimum balance due, you are essentially agreeing to pay more, sometimes much more, for your purchases due to the interest charged to furnish your debt.

2. You’re Not Saving Anything

According to Bankrate, only about 39% American households are able to save $1,000 to cover unexpected expenses! If you’re spending more than you make, clearly you have a debt problem.

3. You use one credit card to pay off another

One of the signs of potential debt problems is swiping one credit card to pay the bill of another. Unless you’re transferring debt to a 0% interest card, you’re compounding the problem.

Also, when you use cash advances and payday loans to repay other debt, the interest rate and repayment structure of these types of loans can quickly become untenable.

4. You’re near the limit of your credit cards

By applying for new credit once you’ve maxed out your existing cards, you invite more problems. And when you see you’ve reached near the limit on your cards, it is a sign that you’re in debt problem.

5. You have tried some debt relief strategies without success

Have you tried any DIY debt relief strategy but you weren’t successful in controlling your debt? If so, you may want to consult with a personal debt professional or financial planner.

6. You can’t keep a track of your debts

Do you know the exact amount of debt you need to pay off? If you don’t know the total outstanding balance, you may be avoiding the issue and will likely not have the motivation troubleshoot solutions.

7. You are getting calls from debt collectors

At first, most companies you owe will initially assign the debt to their internal collection department. Then, if the debt is not paid, it will be assigned (or sold) to a third party collection agency. When debt collectors start calling you, you know the debt will be aggressively pursued. Fortunately however, many debt collectors will accept whatever amounts you voluntarily propose to pay.

8. Your credit score is decreasing

Your credit utilization (the amount of debt with respect to your available credit) comprises of 30% of your credit score.

So, when your credit score decreases, it may be a sign that you’re in debt problems.

How to fix your out of control debt

When you experience any of the above-mentioned problems, you should think about how to get your debt under control without wasting any more time.

Here are a few ways to fix your debt problems.

Plan a realistic budget

The first step to get a grip on your money and plan a realistic budget. By creating a budget, you will start to see where you’re hemorrhaging the most money.

You may not be successful in planning a realistic budget in your first attempt, but if you’re persistent the benefits of budgeting will eventually be revealed.

Follow one or a combination of suitable debt relief strategies

Once you’re able to save a significant amount, choose one or a combination of debt relief strategies to solve your debt problems.

Change your lifestyle for good

One of the best ways to control debt is to change your lifestyle. That doesn’t mean that you have to compromise on your enjoyment; just that you have to be aware of overspending.

Start by allotting a certain amount every month towards your budget for recreational purposes. At the end of the month, reflect on whether you felt you spent enough, or too much on unnecessary entertainment expenses.

Stay patient and motivated until you repay debt

Whatever options you choose to fix your debt problems, be patient and stay motivated.

You didn’t incur so much debt overnight so it’ll take time to repay it.

Set achievable goals and reward yourself whenever you attain one. This way, you’ll stay motivated until you repay the last cent and repay entire outstanding balance within a definite period.

Author Bio:

Good Nelly analyzes financial happenings and writes articles help her readers plan for their financial future.

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