Debt seems to catch people by surprise, there are a few warning signs of future credit problems that you should be aware of. If you know what to look for, you can still turn things around before it's to late.
Who's the most likely to fall into debt? Even though we are all susceptible to credit problems there are several groups that are more likely to have credit problems, according to Credit Counseling Groups. They are:
- Young people
- Households with children
- Low-income households
- Retired people
What are the warning signs of debt? The earliest warning signs of a credit problem include not having much money in your bank account but seeing high figures on your credit statements. As you shuffle money and credit around to try and make ends meet, you may see these additional warning signs as indicators of debt. They are:
- Regularly paying bills after their due dates
- Using cash advances on credit cards to pay off other credit cards (you may also be using cash advances for basic purchases, like rent or groceries)
- Asking family and friends for money
- Looking for a second job to make ends meet
If you see these signs get ahead of the problem. Most likely you don't have a budget. This will allow you to see how much money is coming in, and where your money is going. Also, once you create a plan to get out of debt, your budget will be a trusted map to show you the way.
If neither a pencil and paper nor an Excel spreadsheet appeals to you, check out Mint.com online home budget calculator. Simply put in your income and expenses and the calculator will give you a report of what’s costing you the most, how much you’re short each month, and what your debt ratio is.
Next try to get ahead of your debt. If you are having trouble paying back lenders, it’s wise to contact them. Let them know you’re having trouble and see what arrangements can be made to pay them back. Most creditors would rather get less of your money than not get any at all.
Keep in mind that free credit counseling services are available for everyone. If your only sign of debt so far is a super-high credit card bill and a mediocre bank account, it may be a good idea to get help with a new financial strategy before things really get out of hand.
Once you have your new financial strategy and budget in place, be extremely disciplined when it comes to spending. Your biggest purchases in the months that follow will be paying back debt, so now is not the time to increase your debt load any further. If you’ve racked up a lot of retail debt on things like entertainment, clothes and restaurants, you’ll need to look for more frugal options.
If your only have a small debt to repay count yourself lucky you doing something about it now. Most people wait way to long when the damage is extreme.