Debts are usually accumulated when you have credit cards. The more credit cards you have, the bigger your debt becomes if you are not able to control your spending. Credit card companies are generous in granting credits to customers because they know that although collection is sometimes difficult, the end result is, the company can earn huge profits from each customer. The longer you pay off the amount you owe, the bigger the earnings for the credit card company. How can you determine if we are in too much debt?
Look at the list below and see if you fit the description.
- If you cannot pay at least the minimum amount required as payment each month, then that is an indication that you have too many payables beyond what you are earning.
- Having to borrow money to pay your debt is another indication that you are in too much debt. If you have to use your credit card to pay your monthly payables because you are short on cash, you are further increasing your debts because of the new credit you had to take.
- After a monthly payment, your balance on your credit card should significantly decrease. If the balance increased it is a sign that you need to review your finances.
- When your credit card is declined in stores, this means that you have gone beyond your credit limit and need to start regaining control of your spending.
- If your have several credit cards but with large unpaid balances, you are bound to start having debt problems.
- A bouncing check is also an indication that your financial standing is out of control.
- When you start receiving telephone calls from collection companies reminding you of unpaid debts that means that you need to take steps to resolve your financial problem.
It is not easy to admit that you have placed yourself in heavy financial situation. You can make yourself believe that you can afford to pay off expenses incurred but unless you have income coming in, the situation cannot be resolved. Your debt problem will not be resolved but it may even increase.
Having too much debt is a problem. Although the basis for having a lot of payables differ from one person to another, the earlier you accept your financial issues, the faster you can take action to realign your spending.
It is not enough that you recognize you are in financial trouble. Everybody acquires debts but you should be able to manage them. Debts should be paid as due and the payment must come from a regular source that is intended for the purpose. Paying your debts will give you financial freedom. You would be able to sleep soundly and can relax.
Know how to determine your credit capacity. Be aware of your spending and know how much income you have that you can spend. An awareness of you capability to spend could improve the overall quality of your life.