It is not by chance that many people face financial difficulties: they do not always (or almost never) arise suddenly, overnight. Rather, they are the result of a set of ongoing behaviors that accumulate over time and culminate in a complex situation to resolve.
For this reason, it is very important that – regardless of the amount of money you have or the efficiency with which you manage your budget – you should know how to recognize the signs that you have too much debt🇧🇷
First of all, it is important that you understand that having too much debt does not always mean being in default. You can have all your bills up to date, never have a payment late, and still be over-indebted. And it is precisely at that moment that your last opportunity to put everything in order ends, so as not to default.
10 signs you have too much debt
Don’t know exactly how much you owe
Ignoring your problems will only make them worse.
Not knowing exactly how big your debt is can be a sign that you subconsciously already have a suspicion that it’s too high and you’re purposefully putting off the problem.
Stop this behavior immediately. Take the necessary steps to know exactly how much you owe and put yourself in a position to get out of debt.
You are giving up essential expenses to pay off loans
If you’ve ever had to choose between buying something you need every month or paying off a monthly loan, then you’re in debt. Debts only make sense as long as they don’t interfere with your daily life.
Understand that when it comes to choosing to pay off a loan or make a regular expense, it’s not just about buying food. Of course, if one day you had to choose between paying off a debt or putting food on the table, you are clearly in a situation of danger, but if you have to choose, for example, between paying the condominium or paying the loan, that is already a sign of warning of over-indebtedness.
Has an effort rate greater than 40%
Even if you are able to pay off outstanding credits every month without sacrificing other expenses, an effort rate of more than 40% (that is, spending more than 40% of your monthly income to pay off debt) should put you on your guard.
There are many variables that can change your financial situation and increase the difficulty with which you keep your credits in order – a rise in interest rates, a situation of unemployment or a prolonged low, for example – and a high stress rate only leaves you particularly vulnerable. .
To calculate your current effort rate, simply divide the monthly expense related to your debts by your salary and multiply by 100.
Example: Debts €700 / Salary €1200 x 100 = 58.33%.
You are borrowing to pay what you owe
One of the most alarming signs that you have too much debt is that you start to need to borrow money to pay off other loans. This is never a good approach to debt, as it will only make it grow and linger over time, so if it gets to this point, seek help right away.
Don’t have a set plan to get out of debt
If you can’t predict a date or envision the day when you will be debt free, it’s time to sound the alarm, as this is one of the most obvious signs that you have too much debt.
Accumulating debt without having a plan to pay it off is a sure path to bankruptcy.
Don’t try to fool yourself into thinking the problem is easy to solve. If you don’t chart the path to financial health, chances are it will never appear.
Have too many credit cards
If your stack of credit cards starts to look like a deck of cards, it is recommended that you audit your finances.
One or two, at most three, cards with conditions you like should be enough.
Carrying so many lines of credit in your wallet is the first step to converting them into debt.
Hide family debts
Why would you hide your finances from the people you love if there wasn’t a very real problem?
The most likely answer is knowing that they would not approve of your financial decisions, a sign that you may be spending irresponsibly.
If you can’t deal with your debts honestly, there’s definitely a problem.
Your finances steal your sleep
Does worry and numbers keep you up all night? If yes, it is a sign of a serious problem.
Money worries us all, often more than it should, but if this worry is turning into a real disruption to your sleep habits, it’s time to look for a solution.
Do it quickly and don’t put off the problem any longer.
Have you ever defaulted
It may have been one time without an example, but it certainly happened because there really was no other way to solve the problem.
Default is one of the biggest signs that you have too much debt. When this happens, the best thing to do is to seek help, even if a few weeks later you have managed to restore the budget balance, because it is clear that this balance is too fragile and can be lost again.
Family budget causes too much strain at home
When your family life is made up of arguments about the lack of money and how it is spent, your family budget is carrying extra debt.
Not going home to avoid screaming and not being able to talk to the people you chose to share your life with is unhealthy.
Try to keep a cool head and don’t forget: everyone makes mistakes, even the people you love the most.