In the beginning, you may justify swiping your credit card more often or borrowing from friends to satisfy your impulsive spending behavior. But, as you sink further into the sea of debt, you could start denying that you’re having a tough time dealing with your financial obligations.
If you don't want to wreck your financial life, then heed the below mentioned financially destructive signs.
1 You frequently borrow money from friends and banks.
Suppose, you’re a freelance blogger and you’ve taken out a personal loan to pay back a credit card balance worth $6000 and open a savings account. You could be hit with an interest rate of around 10% on the new loan for another 3 years or so.
The motive behind this story is to make you believe that you have little to no savings at all. And this is the reason why rainy days, in your case, implies borrowing more money.
Like many people, you may encounter financial hiccups every now and then. However, if you see yourself asking for loans from your acquaintances to pay off your debts, and can’t repay them on time or you don’t altogether, then your finances are in a poor state of affairs. It may also ruin your relations.
2 You live paycheck to paycheck.
Your American Dream has become costlier and that’s evident from your soaring debts.
There are some major living costs which consumers have to bear regardless of their paycheck amount like food, housing and medical care.
A single financial emergency will be sufficient to bankrupt you. So, before you’re struck with a crisis, make sure you have your defenses ready to tackle the unplanned monetary challenges.
Spend less whenever possible and work towards generating more income.
3 You’re highly dependent on credit.
As per the 2013 data sourced from TransUnion, the total number of unsecured loans originated increased by 30% that hiked the numbers from 10.57 million borrowers in 2013 to 13.72 million in 2015.
Among the unsecured debts was credit card, one of the costliest debts of our time. Hence, it’s insensible to be a credit card debt revolver. The average American household pays around $1,292 as interest on their outstanding balances, annually. That amount could rise to almost $1,309, if the Federal Reserve increases interest rates, even by a quarter of a percentage point.
When even the fundamental needs of life such as foods or gas become unaffordable, it’s the tipping point where you’ll have to reanalyze your budget and make the necessary rectifications.
4 You tell lame financial lies.
So, are you lying to your partner about all that you’re buying? Do you waste your money gambling or excessively going shopping out of leisure?
Consult a therapist to confirm whether or not your reckless spending attitude is related to your mental health that requires help.
5 Your credit accounts are badly in collection.
Like millions of Americans, you too may need help for your debt problems that you just won’t accept.
The data published by the Urban Institute after a research, revealed that approximately 1 out of 3 adults (77 million people) have got their credit accounts put into collections, due to payment default. They also studied non-mortgage debts, for example, car loans, credit card bills, parking tickets, medical bills and child support payments.
The debt in collections ranged from as little as $25 to a whopping $125,000. But the average amount owed was $5,200.
The credit accounts in collection had an outstanding balance as low as $25 to an astounding amount of $125,000. However, the average debt owed was $5,200.
Tossing away your credit card statements into a corner will only provide you with temporary relief. Rather, you’d aggravate your financial health from bad to worse. The fact is your debt and the debt collectors will soon catch up with you. And keep you trapped in the debt cycle.
So, stop playing hide and seek with your money, and do some serious work.