How do I know if I have too much debt?
In the today’s age, we all live on the means on credit. Credit cards, loans and mortgages are all credit lines. And, it’s not only you that runs a credit line. All the governments of this world run on a deficit budget, where in they spend more money than they have and take many lines of credit to make up for it. You probably don’t even have any cash notes on you and your wallet is probably stuffed with a variety of credit cards. Even after 10 years are you still trying to pay off your housing loan? These are signs that you are gathering debt.
Here are six ways to know if you are carrying too much debt.
All Payments go to Debt
Sit down and calculate where all your money goes in a week or a month. Take a look at your credit card reports and other financial statements. Total your debt payment and compare them with your monthly income. Ideally, you should not be spending more than even 36% of your monthly income on your debt payment; and if you are paying more than 50% of your monthly income on debt payment, you are heading into serious trouble.
Affording Only Minimum Payment
Your credit cards, loans and other credit lines demand a monthly payment every month. Are you able to pay them easily or are you seriously facing a problem every month to find that finance for those debt payments? If such is the situation, then your financial situation is obviously being strained.
Try to get the credit companies to get lower the interest rate, so you can cope up.
Denied a New Credit
Have you tried to get a new loan or credit card and got denied? It’s time to check your credit score as well as the debt service ratio. One of the main reasons you could have a low credit score is because you have high debt service ratio. The more debt you carry, the harder it is to get a new credit line or even an increased limit on the existing credit line.. Most lenders send in rejection letters which cite the reason for the rejection, so read them well if you get one.
Empty Savings Account
It is financially healthy to put money aside from your monthly income for a savings account which can be used for a rainy day. So, have you take a look at your savings account lately? You may never realise it, but when you have pressing debts, slowly by slowly, you start emptying your saving account without putting new money. So how much is left in your savings account?
Paying Your Bills
Bills are something you can’t avoid. Electricity bill, internet bill, water bill, they all have to be paid. So are you able to pay them on time or have you paid them late, or worse, you’ve defaulted on them? Missing out on your bills show that you are not giving enough priority to it; probably because you are more focused on paying those monthly credit expenses.
Sometimes, we just don’t want to see what is in front of us. Are you having sleepless nights worried about how you are going to make those payments? Stress, anxiety, insomnia are all signs that the worry is getting to you.
When debt is really lagging on your shoulder, perhaps it’s time to change your lifestyle. Consider things like selling your car, changing your house and increasing your income. No wants debt on their head.
If you have any of the above issues, if would be better to sit with an licensed debt Consultant and understand the options, on what are the options available. You could also call us on 780-665-3767 if you wanted an unbiased look at the options.