Debt isn’t just something which impacts your finances, it can affect other parts of your life as well. Being able to deal with your debt and recognising the signs that you have a debt problem is very important, otherwise your debts may escalate and leave you facing serious consequences. If you are questioning whether you have financial problems then there’s a good chance you do, but to help you assess your finances our expert team here at IVAplan.co.uk have compiled a list of some warning signs.
- You are struggling to pay your bills
- You don’t know what you owe
- You don’t answer the phone in fear it’s debt collectors
- You are struggling to pay your bills
- You are hiding your spending from family
- You can only afford to live off loans
- You have no more savings left
If you can’t afford to pay your bills each month or are struggling to meet minimum repayments, then you are in too much debt. Try not to make payments later than they are due, as this can make you fall deeper into financial difficulty. Payment penalties and higher interest charges are normally associated with paying late, and are a quick way to lose control of your personal finances. Look at your monthly spending habits to see if you can cut back on your expenditure to ensure you are able to pay your bills on time.
If you have to pay your bills through loans from credit cards, payday loan companies or even family and friends, this is a major sign that you have a debt problem. Borrowing from family and friends can affect your relationships and cause you to feel isolated if you have nobody to turn to or confide in about your problems. You will eventually run out of places where you can borrow money from and you’ll have to face your creditors to repay the money you’ve borrowed.
Hiding from debt problems doesn’t make them easier and make them disappear, so you have to face up to what you owe or you can make it worse. Make a list of who you owe money to and how much you have borrowed from them, and then make a plan to deal with it. Make sure you give the highest priority to the debts which are the most urgent. Not all debts are equal and there are certain debts you should always pay first, because if you ignore them you could suffer more serious consequences. Debts which should always be paid first include mortgage, council tax payments, income tax and rent.
Although other debts may be important to you, they should be classed as non-priority. This may include other money you owe such as an overdraft, loan, credit card payments and any money borrowed from family. Although these aren’t a priority and the consequences of not paying them are less serious, it is very important that you don’t ignore them and make sure you are paying what you can towards them.
When you fall behind on payments or can’t meet the minimum required payment for them every month debt collectors are likely to start calling you, which means your debt has probably become unaffordable. You may ignore the calls for a while but this can result in even worse consequences, so it’s better to take control of your debts by speaking with your creditors, and – if you can’t deal with your debt yourself – seeking help from the experts. Our highly-trained team here at IVAPlan.co.uk can guide you through the range of debt solutions available to you and your adviser will be able to begin to arrange a payment plan and take on the responsibility of dealing directly with your creditors, removing the stress and strain from you.
If you are having trouble sleeping at night or if you find you wake up worrying about your debts and how you will pay your bills, this is a sign your debt is out of control. When your debts start to affect your personal life or cause you trouble you at work, you need to come up with a plan to try and deal with them quickly. These personal challenges and such a financial strain can cause difficulty in the workplace. The last thing you need is to underperform at work, which can eventually lead to you losing your job. A drop in your income will only make your financial situation worse and could put you over the financial edge. Seek help before it’s too late.
An associated problem which often presents itself in individuals with debt problems is the use of alcohol or drugs. Using alcohol or other substances to deal with your debt worries will make things much worse for you both financially and personally. Instead, contact people you can trust to help you navigate your way out of debt problems.
If you are hiding your financial difficulty from loved ones because you are worried about how they will react or if you cannot be honest about your situation and are continually lying about what you are able to afford, you have a debt problem. Perhaps the reason for keeping your debt a secret is because you’re worried they will stop you from spending. If this is the case, you may have a more serious problem rooted in your relationship with spending, but it is important to remember that you can always get help.
If you are spending more than what you earn and borrowing money to try and fill the gap, you have a debt problem. As a basic rule, you should avoid borrowing your way out of a debt problem – however, this depends on how much debt you are in. You should never borrow more money to relieve yourself from debt, but if you are able to borrow from somewhere cheaper to replace existing borrowing then it will help you. Getting a lower interest rate means more of your money can be put towards repaying your debts rather than servicing the interest.
Having limited savings does not necessarily mean you are in debt, because you may have recently used it for a one off expensive purchase such as a new boiler or repairing your car. However, if you had to use your savings to pay off a debt or cover your costs for the month, that’s when you know you’re in financial difficulty.
How we can help
If you feel that your life is being controlled by debt, or that your financial worries are negatively affecting you then you should contact our team. Our highly-trained advisers have gained a reputation for fair and reasonable advice, and for building the best solutions for our clients. With our help you can begin the journey to a life free from debt.