By all accounts, debt is up … and not just in government. Household debt is climbing exponentially, and credit cards are a major culprit. With the recent economic downturn, credit card holders are maxing out cards, sometimes just to buy necessities. Here are major signs that it’s time to seek debt counseling.
1. Maxed out
Maxing out a card might be necessary in an emergency, but if you’re consistently using credit cards for nonessential purchases, you must rein in spending. Because credit cards come with hefty interest rates, chances are you’re wasting a lot more than you thought on unnecessary items.
2. Minimum payments
You have a credit limit of $5,000. At 14% interest, it will take more than 20 years to pay it off with just the minimum payments, and you’ll end up paying double by the time you’re done. Additionally, if you have multiple cards you’re making minimum payments on, you’ll pay tens of thousands more by the time they’re all paid.
3. No savings
You’ve heard it before, but you’re still not doing it … pay yourself first. Saving 10 percent of each pay is an essential part of household finance planning, but if you’re saving little to nothing, you should seek help to set a realistic budget that pays bills and saves for a rainy day.
4. In the dark
The official term is ‘debt denial.’ If you’re avoiding the truth about how much debt you have, the situation isn’t going to get any better. Open your bills, look at total amounts owed, and stop denying the extent of your debt.
5. Alternate income
If you find yourself looking for alternate means of paying your bills, such as payday loans, borrowing from family, or even getting new cards to pay old ones, you’re in over your head, and you need debt counseling.
6. Hiding bills
Your relationship thrives on honesty, but if you find yourself hiding purchases, or worse, bills, from your partner, your finances — and maybe even your relationship — are in serious trouble. At this point, the only fix is facing facts and getting the debt help you need.
It’s time to be honest with yourself about debt. If you’re, as the saying goes, ‘robbing Peter to pay Paul,’ then pretty soon Paul will also run of money. The situation won’t get better by itself. Take a frank assessment of your spending, cut up your cards, and contact a debt counselor before things get worse.
Information credited WBLI Incorporated, credit counselling in Nova Scotia.