Signs You Need a Debt Management Plan

Just having debt isn't an issue in and of itself. The problem is when you have more debt than you can manage. When it becomes too much to handle, you should shift your focus on how to get out of debt.

To help you determine if your debt is becoming a problem you need to solve, here are some warning signs:

• You only make the minimum payment because that’s all you can afford.

• Your minimum monthly payment is large. If you add up all the minimum monthly payments of your credit cards and it accounts for 20 percent of your monthly income or more, you may not be leaving enough money for necessities like food and shelter.

• You're receiving calls from debt collectors. Collections efforts don't usually start until you've begun missing payments, so if you're getting calls, you've likely started falling behind on your debts.

• Paying one debt with another. If you’re transferring balances or putting basic necessities like utility payments on your credit card because that’s the only way they can get paid, that’s a problem.

• You take a cash advance on your credit card. This is not only a sign that you’re not managing your money well, it will also put you in deeper debt. Most cards charge a substantial fee for this service.

• You have no savings. If you don’t even have a few hundred dollars in an emergency fund, you will find yourself in financial trouble as soon as your next big emergency hits like your car breaking down.

• You don’t know your financial situation or have a budget. If you don’t budget your money and don’t even know the total amount of debt you are carrying, you’re bound to be in financial trouble soon.

If you recognize yourself in any of these warning signs, it’s time to act and work towards getting out of debt. There are a few things you can do to get ahead of your impending debt crisis to put yourself in a better place financially.

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