5 signs you have too much debt

Do you ever feel like you're always in debt? Are you forever trying to pay off that credit card or store account, but the balance never seems to decrease? You might have too much debt.

We all have debt in the form of credit card accounts, a car payment, or even a bond on the house. Having some form of debt is good because, as you pay it off, you prove your reliability to creditors. This means you can get loans and other forms of credit at favourable rates when you need it most.

Many people, however, do not manage their debt very well, or keep on adding to it. Let's go through a few tell-tale signs that you’re drowning in debt.

Note: In this blog post, we'll be talking about debt arising from things that lose value over the years or that get used up in a short amount of time. Some people call it 'bad debt'.

• Living salary-to-salary
  
  Your net pay at the end of the month is just enough to cover your important expenses and you certainly don't have enough left over to put towards reducing your credit card balance. And if this is forcing you to cover the gaps by spending on credit, then it's a major red flag that you have more debt than you can handle.
  
  
• Relying on credit rather than using credit as a choice
  
  Relying on credit to purchase cheap items is a sign you're in too much debt already. You should be able to shop at the supermarket, for example, using cash, or a debit card. Using your credit card to make small purchases is a sign your budget can’t even cover small purchases and it’s something you should not ignore.
  
  
• You make purchases using a credit card you’re trying to pay off
  
  Shopping using a credit card that you're trying to pay off, is a sign you're going in circles. To avoid getting into a situation like this, start paying more than the minimum balance you owe each month.
  
  
• Your debt balance doesn't go down no matter how much you pay
  
  We all have a certain amount of debt, but it gets paid off eventually and doesn't severely limit our ability to spend money on other things. In other words, the debt is something we can afford and keep under control. However, if your debt balance is not decreasing, then there is a problem you need to address. It's an even bigger problem if you don't know how much you actually owe.
  
  
• You don't know how much debt you have
  
  A common sign that you're too deep in debt is not knowing how much debt you have to begin with. This is a sign that you're not in touch with how much you spend and have lost control of your budget.
  
  It's time to take action
  
  The best way to take control of your debt is to confront it head-on. Start by making a list of all your creditors and what you owe. Figure out if you can budget for closing off these accounts. If you don't have the funds currently to pay off the debt, then consider taking out a consolidation loan. Many people have had success with a consolidation loan, not only in paying off their debt, but also in creating the financial security they always wanted.