Often times the hardest thing to do is to face the truth about a problem. Recognition is the hardest yet least achieved step for people who are problen debtors. Often times reaching a boiling point in their debt situation before any kind of hard truths are realized. Unfortunately, by that time it is often too late. It is certain that if you think you may be in a financially tight spot, then you probably are.
The biggest similarity with people in severe financial strain is that almost everyone notes that their debt seemed small at first but then just snowballed into an uncontrollable monster. If you are using whatever savings you have on a regular basis to get by, then a possible disaster is on it’s way if this type of money outgo continues.
Most people burdened with problematic debt actually start their lives as financially responsible people. A common trend that seems to occur is the lack of discipline when it comes to the areas of staying on a budget and saving. When we first start working and earn an income, we inherently desire to save a portion of that income. Poor spending habits seem to evolve not too long after our first few regular pay checks. At first, most people do not feel secure enough to spend freely. After a sense of regularity falls upon us, the human nature of desiring things we don’t have takes over and before we know it we are spending more than we make.
As a general rule, your total outgo for all expenses and debt obligations should not exceed 35% of your monthly gross salary or total income.
Here are a few things to examine to determine if you have a problem:
- Unable to save any money on a regular basis
- Frequent withdrawals from whatever savings you have in order to get by
- Accessing credit cards to pay bills or expenses on a regular basis
- Charge cards are at their limits
- Heavy reliance on overtime or a second job in order to meet expenses
- Frequent “insufficient funds” or over drafts from your bank account
- Often borrowing money from friends or family
- Skipping of payments of some creditors in order to pay others