Updated: June 7, 2020
People who are deep in financial liabilities didn’t just wake up one day and suddenly found themselves drowning in debt.
Debt troubles don’t happen overnight. In most cases, it started from a series of bad financial decisions and poor money habits, which were left unchecked and never corrected.
Below are some of the early warning signs of debt trouble. It’s important to recognize these symptoms as soon as possible, so you can manage your debt by controlling your budget and spending before it becomes a serious problem.
1. You’re finding it hard to save money every month.
If you don’t have savings, then you’re probably just one financial emergency away from serious debt trouble. Study your cashflow as soon as you can, minimize expenses and try to build additional sources of income.
2. You’re not paying your credit card balance in full.
Before someone drowns in credit card debt, there would several months when they couldn’t pay off their credit card balance in full. If you’re at this stage, immediately stop using your credit card, and commit to a debt payment strategy.
3. You’ve been declined a credit card transaction for going over the credit limit.
When this happens, you probably don’t monitor your spending, much less your credit card purchases. Take your credit card out of your wallet, and don’t use it until you’re able to pay off all your debts.
4. You’ve been frequently missing the payment due date of your bills.
Your electric bill, apartment rental, phone subscription, water utility, etc. — these are all regular expenses and you should have funds set aside for them every month. If you’re having difficulties meeting their due dates, then it’s time to sit down and commit to a budget.
5. You make impulse purchases every time you’re in the mall.
I have a friend who never fails to buy something whenever she’s at the mall. She actually becomes restless if she doesn’t purchase anything. I noticed that she started this behavior when she got promoted at work. Three years after that time, she found herself deep in credit card debt and had to do serious damage control on her finances.
6. You needed to borrow money for an urgent and important expense.
You don’t know when it will happen, but it will happen. I’m talking about unexpected expenses. That’s why you need an emergency fund. If don’t have one and you had to borrow money or use your credit card when they happen, then it’s a sign that you need to start building your emergency fund or else you’ll be debt trouble soon.