Do You Know The Warning Signs Of Too Much Debt?

In recent years Australians have been on a debt binge. Personal debt is at record levels. With rising interest rates there is not much room to move.

Do you know the warning signs of too much debt? Credit is great when it's used wisely, but more and more Australians are getting in over their heads and threatening their financial futures.

Just because you can pay your minimum payments each month doesn't mean you don't have a credit problem. Remember, low minimum payments benefit the credit card company, not you. They are the means by which many people become enslaved to their debt, taking decades to pay off purchases whose prices have become grossly inflated by interest charges that have accumulated for years. This is how credit card companies make their money.

Don't allow yourself to be lulled into a false sense of security that you have your debt under control just because you're not late on any payments and you can manage the monthly minimums.

Here are some of the warning signs that you have a credit/debt problem.

If you answer yes to one or more of the first six questions and no to the rest, you may have caught the problem before it's unmanageable, as long as you act now to change your spending habits. If you answer yes to one or more of questions 7 through 14, your problem is much more serious and will require more drastic steps. Time is of the essence.

Warning Signs of Debt Problems

• You don't have any savings.
• You make minimum payments on your credit cards.
• You use credit cards for things you used to buy with cash, such as groceries.
• You use increasing amounts of your total income to pay off debts.
• You have more than two or three major credit cards.
• After you pay your credit card bill, you increase your balance by the same amount (or more) the following month.
• You're at or near your credit limit on your credit cards.
• You're unsure of the total amount you owe on all your debts.
• You take out cash advances on your credit card to pay other bills.
• You've tried to make a purchase with your credit card and been declined.
• You've been denied credit.
• Your cheques bounce.
• You get calls from debt collectors.
• You lie to your spouse or other family member about your spending or hide credit card statements from family members.

If you realise that you are in over your head, the sooner you act, the easier it will be to get out from under the burden of debt. Beware of companies that promise to fix your credit or debt consolidation companies. There's no easy fix, but it is possible to turn your finances around if you work at it.