Many people are in denial that they are in debt. They believe they are having a bad financial moment that will shortly pass. They however do not spend the time to look at their budget and analyze if it can be stable again in the near future. There are many signs showing when debt is happening for a household. Here are 4 signs on how debt begins.
Credit Card Abuse
It’s ok for people to use credit cards for emergency purposes, small unexpected purchases, or even for general use to stack up their rewards points. However, once you need to use your credit cards as opposed to optional, that is a clear sign you are leaning towards debt. Another sign of credit card abuse is if you are borrowing from one card to pay another. This can be either directly or you find yourself taking cash advances. A final warning about credit card abuse is always being at or close to your credit limit.
Denial of Credit
If you find yourself applying excessively for credit cards and being denied this is another sign of being in debt. Most people are aware that if they apply for credit it can negatively affect their score. If you continue, it show’s you are desperately needing another source of income for your home. Also, some people will call and ask their creditors for an increase in their credit, often being denied the request. Unfortunately, if you start having negative credit inquiries and reports, you will find many creditors will automatically lower your current credit line.
You Have to Take Loans to Pay Bills
One of the sure ways to tell you are nearing debt is when you have to borrow money and take out short term loans to pay regular monthly bills. Anyone can get in a bad situation once or twice in their life, but once you have to depend on loans for your monthly expenses, you are showing you are not managing your money well. You should never live above your means, and if your regular source of income is not enough to cover the bills, you are headed deeper into debt.
Heavy Financial Arguments At Home
The major sign of debt for most households is when you and your partner start having arguments over finances. Usually one person will recognize the collection calls and notices and overspending habits of another. At this point in time, repairing the debt issue alone may be too late. It may be time to seek the help of a counselor.