Having a bit of plastic in your wallet is almost our national pastime. It can be a great way to use your money, but it does often lead to our other national pastime: too much debt. Carrying too much debt creates unnecessary additional costs and stress. Anyone who’s avoided phone calls, been too anxious to check their mailbox or laid awake at night, know the feeling of having debt creeping into their lives. But what’s the telltale sign you have too much?
1. You’re carrying a credit card balance. One of the ways to tell if you have too much debt is if you don’t pay the full balance of your credit card each month and carry it over to the next month. This is simply too much money going out and not enough coming in. My students could tell me the math doesn’t work out on that one, and they’re only 4.
2. You have to use credit cards to pay for everyday items. Groceries, gas, utilities, ice cream; these are the necessities of life. But when your next gas tank needs refueling, or you need to top up your Baskin Robbins, and you turn to the card, this means too much debt. Probably too much ice cream as well, but who am I to judge?
3. You’re only making the minimum payments on your credit cards. Minimum payments on a card are the credit card company’s dirty little secret. They like that you only pay the minimum, which adds to years and years of paying even a small debt. Even if you’re not paying the whole amount, pay at least more than the minimum to avoid this pitfall.
4. You’re regularly making late payments. Not only does a late payment incur an interest charge, but the credit card company also cashes in with a late fee, a penalty fee, a “just because we can“ fee. This is where the real money lies in for the credit card companies. Not paying on time puts more money in their bank account and continues to rack up your own debt.
5. You’re lying to others about your finances. You can lie to your mirror quite easily. You could be saying all that Baskin Robbins is doing you good. But when you have to lie to others about your financial health, you don’t have it. Your debt is probably too high which is why you don’t want to tell anyone else about it.
6. You don’t have any savings. Is there anything in your savings account right now? Like most families, probably not enough. But a sure sign that you have too much debt is if you stop saving altogether. If you’re not putting money away, it’s being siphoned off into other places that it shouldn’t.
This could be a wake-up call for those who have that boulder around their neck often known as debt. It’s not normal, it shouldn’t be a standard way of living, and you shouldn’t accept that as “that’s just how it is.”
If you answered yes to any of these questions, get a financial plan for your debt, and regain your life.