You Know You Are In Need Of Debt Relief When…

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There is nothing harder than helping someone who doesn’t think they need help. That statement is certainly true for borrowers and debt relief. We live in such a crazy consumerist society that sometimes we don’t realize when we are living beyond our means and are in need of urgent help. Like an anorexic teenager we can look into the mirror and see a financially healthy person while we are really killing ourselves. How can you tell if you are in serious need of debt relief?

We are going to mention a number of signs that will tell you that you need urgent help. Obviously these are not set rules but more like a general ballpark of financial safety you must try to stay within.

1) You have no savings. We live in a spend first pay later culture, not a save now buy later culture. This mentality increases the chances of financial problems and reduces the value of things that can be purchases on a whim and on which we must often pay interest for years. Many governments are trying to fight this attitude by encouraging people to save. A good rule of thumb is to save at least 10% of your income.

2) You only make minimum payments on your credit cards. Uncontrolled spending on credit cards can be one of the fastest routes to bankruptcy. Spending money you can’t see and don’t have to pay back in a hurry is a great recipe for financial bankruptcy. It is important to pay for your credit cards before they accrue interest or to use credit cards as an emergency ONLY and use other financial products like loans, equity loans and other options for borrowing. Paying minimal credit card payments is a silly path to everlasting loans that you end up never paying.

3) You don’t check your statements and don’t know exactly how much you owe. As we mentioned in our previous article fear often breeds on ignorance and when we are fearful we sometimes hide behind our ignorance as if it were a shield. Understanding our situation is the first step to fixing it.

4) You have more than 3 major credit cards. There is really no need for various credit cards when you are not leaving beyond your means, one or two are more than enough. It is a slippery slope when we start relying on credit cards to get to the end of the month, buy things we can’t afford and eventually to pay the interest of other credit cards.

None of these situations is final or hopeless. However action is required to avoid the problems that bad financial habits can cause you. Finding the right advice and sticking it can be the difference between bankruptcy and financial security.