How To Know If You Have Too Much Debt

Are you struggling with too much debt? The warning signs may be right in front of your face.

Lego figure with too much debt about to be crushed by a giant shoe.

Debt has become the American way of life. More and more people are carrying too much debt and struggling just to get by every month.

Credit cards are just so easy and convenient. Why scrimp and save for months to buy something you want when you can just whip out your credit card and have it now?

You’ll worry about paying for it later, right?

Unfortunately, that’s a dangerous game and if you’re not careful you can dig yourself in a deep hole called the Debt Trap.

And once you fall into the trap, climbing out can be a long and difficult journey.

Trust me, I’ve fallen into the debt trap myself.

I’m not proud of it. In fact, it sucks.

In the past my family made a few bad financial decisions and we had to deal with some unexpected expenses that left us with way too much debt. Even though I earn a good salary, we still found ourselves struggling to make ends meet because so much of our family income was going towards debt.

The worst thing about debt is how it makes you feel. You feel ashamed that you feel into debt in the first place, and your pride prevents you from asking for help or even admitting you have a problem.

Meanwhile you work your butt off trying to get ahead but you end up on an endless treadmill to nowhere with creditors just waiting for you to slip.

Yup, that’s pretty much how I felt all the time.

If you’re struggling with too much debt now, take a deep breath. All is not lost.

I mean, it’s not great to be in debt but you can dig yourself out if you work hard and stay disciplined. We’re still working on paying down our family debt buy I feel like we’re at last moving in the right direction.

The key is to go into emergency mode. Stop using your credit cards, get yourself organized with a repayment plan, and pour every extra penny you can towards paying down your debt.

But how exactly do you know when you’ve fallen into the debt trap?  Luckily, there are some signs to look out for…

7 Warning Signs You Have Too Much Debt

Take a good luck in the mirror and see if you’re experiencing any of these warning signs of debt problem

You Only Make The Minimum Payments

Credit cards aren’t all bad. They’re convenient to use, accepted just about everywhere, and you can use them to earn valuable rewards like gift cards or discounted hotel stays.

But credit cards are only good for you if you pay them off every month.  As soon as you start carrying a balance you’re on the losing side of the equation.

Paying only the minimum amount due each month is exactly what the credit card companies want you to do. You’ll end up paying a fortune in finance charges and it will take you far longer to pay it all off.

If you really can’t afford to pay more than the monthly minimum it’s a sure sign you have too much debt.

You’re Missing Debt Payments

One of the worst things you can do when you’re in debt is to miss payments or send in payments late. When you fall behind in payments your creditors will hit you with hefty fees and penalties.

They may also increase your interest rate which means you’ll pay even more on your previous and all future purchases.  They might even sell your debt and force you to deal with aggressive debt collectors.

Each of these actions will have a negative impact on your credit score and that will affect everything from your ability to get a loan to how much you’ll pay for car insurance.

You’re Using Credit Cards For Everyday Expenses

When you find yourself paying for groceries, gas, and bills with your credit card because you don’t have enough cash on hand to cover them, it means you’re living beyond your means.

Remember, one of the keys to staying in control of your money is to spend less than you earn.

Your Total Debt Keeps Increasing

You should be tracking your debt payments so you know how much total debt you owe. Yes, that can be a bit scary but it is absolutely vital to getting out of debt.

You want to see your debt getting smaller and smaller every month. If the amount grows each month, due to added purchases as well late fees and interest, you’re going in the wrong direction.

You Keep Jumping From One Balance Transfer Offer To The Next

Some people with too much debt think they can be slick by transferring their debt from one place to another. They open up a new credit card with a very low introductory interest rate and transfer their balance to the new card.

When the introductory period ends the interest rate goes up, so they open up another new card and do the same thing again and again.

This strategy may work for a while but it is a dangerous game to play. It’s really just a shell game where you move your debt from one place to another, when what you really want is to pay your debt off.

If you’re not careful you can overextend yourself and if you mess up the timing you could miss payments and get declined for a new card.

If you do decide to transfer your balance to a low interest rate card, don’t use that card for any new purchases. Instead, put all your focus into paying it down as quickly as possible.

You’re Not Saving Money For The Future

Life is all about trade-offs. Every dollar you put toward debt payments is a dollar less you can put towards something else.

And that’s a problem because you need to be putting money aside for your retirement and other financial goals.  Not saving now because you have too much debt means you’ll have to save even more as you get older and that doesn’t necessarily become easier.

It’s easy to say, “I’ll save more money when I earn more.”  But life has a way of disregarding your wishes and messing up even the best laid plans.  So even when you get raises and start making more money, you somehow end up spending more. That’s called lifestyle inflation.

No matter how old you are and what your current situation is, the time to start saving is NOW. The sooner you start the sooner you can start enjoying the power of compound interest.

You’re Stressed And Worried About Having Too Much Debt

Debt sucks. It can strain relationships and lead to all sorts of health problems.

Eighty percent of couples who get divorced cite financial difficulties as one of the primary reasons.

It’s normal to worry about money from time to time, but if you’re losing sleep and constantly anxious about how you’re going to come up with money to pay off your debt, you know your debt if of control.

The Final Word

If any of the debt warning signs above sound familiar (I can almost see you nodding your head) then you have too much debt and you’re traveling down a dangerous road.

You need to take immediate action. Stop using your credit cards. Cut whatever expenses you don’t really need. Create a budget and stick to it.  Get a side hustle and use whatever extra money you earn towards paying down your debt.

Most importantly, don’t give up!  Yes, you are in a tough spot right now but with discipline and determination you can work your way out of it!

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