With most things in life, identifying a problem gets you a lot closer to
its solution. Credit card debt is no exception. The sooner you recognise that
you have a problem, the sooner you should be able to implement some strategies
to address it.
Due to the overwhelming convenience of credit cards, we often find
ourselves almost addicted to using them daily without realising that we are
digging ourselves further and further into debt.
You miss some of
your set credit card payments
There are some clear signs to watch out for that will confirm what you
may already suspect - your credit card debt is out of control, and it is time
to pull the reins in on your credit spending.
You miss some of your set credit card payments.
Irregular repayment of due debts can be a clear sign of someone
experiencing debt stress. Perhaps you find yourself making large lump sum
repayments one month (when you have the cash to do so) while other months you
skip a repayment completely.
Your credit card balance appears to be in arrears - with set interest
not covered.
If you are having cash flow difficulties leaving some debts unpaid every
other month, you are probably carrying too much debt and need to restructure
your finances before you completely lose control and need to consider bankruptcy.
You are using your
credit card for everyday essentials such as milk & bread
Unless you are one of these people who would like to squeeze every last
drop in rewards and bonus points out of your credit card, you are unlikely to
intentionally make everyday essential purchases on credit. While most of us
will use the plastic when shopping in the supermarket, we generally use cash to
buy a litre of milk at the local convenience store.
When you use credit cards to make a purchase, you do not generally feel
the same loss of money as you do when you pay for your purchases in cash. The
purchasing experience on plastic is seamless and does not feel as if you are
spending money at all. It was purposefully designed to be so in order to pull
those unaware more and more into debt.
Your credit card
balance is increasing every month
If the balance of your credit cards is growing faster than your savings,
you are on a way to debt disaster and must STOP.
Spending money today in anticipation that your next pay cheque will
clear the debt is a dangerous approach. People who take this attitude find that
they have no money this month to even cover the bare necessities because they
have already spent this month's wages on last month's expenses.
You have no savings
left - all income is applied to debt repayment
In the past everyone who was working was putting money aside for a rainy
day. Most people had a savings account. However, the problem with using credit
cards is that we borrow money from tomorrow to pay for something today.
Consequently, many Australians have next to nothing in their savings and put
every available dollar on credit card debt repayment.
If you find yourself without a savings account or a savings account that
has been shrinking each and every month, it could be another sign of credit
card stress taking over.
Cash withdrawal
from credit card
We all understand that withdrawing cash from our credit card is very
costly and is best avoided unless there is simply no choice. Anyone who is
starting to use their credit card in place of a savings account is certainly
heading fast towards a debt disaster.
The interest rates on cash advances are usually extraordinarily high and
can, in their own right, cause severe credit card stress.
Cash advances on credit cards should always be your last resort. If you
are finding that you need to supplement your income with weekly or monthly cash
withdrawals from your card, you are in financial stress and need to take urgent
action.
Source: Honey Loans.
