Signs you may be heading for substantial debt (print only)

Many men and women with heavy debt are vague when asked to describe how they got there, often expressing a notion that the debt seemingly piled up overnight. Though it’s possible to incur a substantial amount of debt in a short period of time, many debtors witness their financial pitfalls gradually increase, with interest rates adding up over time.

Men and women who know their debts didn’t occur overnight may have missed the warning signs that they were heading for financial trouble. The following are a few signs that your problem with debt might be on the way to spiraling out of control.

* Minimum payments: Every credit card statement includes the outstanding balance as well as the minimum payment due. In addition, statements now include a forecast of when the debt will be paid in full if consumers make only the minimum payment, and those with substantial debt may notice that they won’t be paying off their debts any time soon if they only make the minimum payment. Men and women who can only afford to make the minimum payment on an outstanding balance should recognize that as a warning sign that they are carrying too much debt and should begin an analysis of their finances immediately before that debt gets out of control.

* Frequent use of credit: Using credit wisely is a great way to build your financial reputation. But using credit poorly can do significant harm to your reputation, affecting your ability to rent an apartment, finance a vehicle or secure a home loan, among other things.

If you find yourself using credit to make purchases you should be making with cash (or a debit card), such as fast food, your morning coffee or monthly utilities, then you’re likely setting yourself up for significant debt in the future. Such purchases have a way of adding up. Before you know it your balance could be higher than you had anticipated and you might have already used your cash supply for other purchases you assumed were affordable. Credit cards should not be used to pay for life’s necessities or every day expenditures, as doing so only increases your cost of living when you factor in the interest you will have to pay when using credit to pay for these necessities.

* Routinely checking balances: Though it’s important to stay on top of your finances, there’s a difference between checking your accounts for discrepancies and checking to determine your available balances. The former is responsible, while the latter suggests you may have a problem with impulse spending. If you don’t have a general idea of what the balances on your credit cards are and you find yourself frequently checking those balances before making purchases, then consider that a warning that you don’t have a handle on your debt.

* No savings: One of the most telltale signs that you might be carrying substantial debt, which, thanks to interest charges will likely only increase, is a lack of savings. You should be savingmoney every pay period. If you’re not capable of saving, then your debts are likely exceeding your income, which puts you on a crash course with substantial debt. If you’re not saving money but you are still piling up debts with purchases made on credit, expect to face some serious consequences down the road.

Few people can say they have never experienced a problem with debt at least once in their lives. But those who often overcome issues with debt are those who recognized some telltale warning signs that a storm of debt was coming and acted quickly to keep those debts from becoming overwhelming.