Debt Crisis

A debt crisis can strike anyone, with causes that range from illness to job loss to poor money management and overspending. Are you in debt crisis? It seems that if you were, you would be aware of that much sooner than anyone else, right? That's not always the case. Many times, people are in denial about their debt load and simply expect that things will turn around. Unless you seek help to navigate the waters of your debt crisis, your money problems will not just go away.

Debt Crisis Signals

There are a number of circumstances that suggest you may be heading for a debt crisis and should seek professional help to re-structure and manage your debt load.

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1. You use your credit card to pay for almost everything, and it has reached its limit. While you used to only use your credit card for its convenience for certain things, you now use it for everything because you have no cash in your bank account. If this is the case, you are definitely heading for a debt crisis, since credit card companies notoriously charge high interest rates. If you get behind on one payment, or continue to carry a balance for several months, you are only paying off the interest that has accumulated, rather than reducing the overall debt.

2. You are having a hard time managing all your bills. Because you have 6 or 7 bills due each month, you sometimes forget to pay each on time, resulting in poor credit and late fees that add up. Instead of juggling your bills, you should consider talking to a debt management professional about your impending debt crisis. A debt consolidation loan may be an option for you, and would leave you with only one monthly payment to worry about.

3. You spend more money than you make. While this may not have caught up with you yet, all economic principles indicate that it will soon, and that it won't be a pleasant experience. Maybe you have used some of your savings to make purchases and have placed others on your credit card, forgetting about them altogether until the bill comes and your balance exceeds your entire pay check. A good way out of this debt crisis is to get rid of all your credit cards, or at least stop using them until you are out of debt.

4. Another symptom of a debt crisis is that you have no idea how much money you owe at all, and are not interested in finding out. If you are afraid of opening your VISA statement each month, or don't balance your check book, you should seek financial counseling. A debt counselor can help you create and stick to a budget, as well as educate you in better money managing practices.

5. You have lost your job and have no idea how you are going to make ends meet. Good financial planning entails that you should save at least 3 months of salary for such an emergency, but for many people, that is just out of the question. Do you have a solution for this situation, in case it happens? If not, you should speak to a financial planner about your options and how you can pay off your debt and start to save for an emergency.