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5 Signs Students Have Out of Control Debt

Aug 21, 2012

It is just alright to take debt once in a while. There are inevitable instances when individuals have to get some loans to be able to cover necessary and emergency costs. Cash shortage is quite common. That is why there are many lenders in business. They intend to reach out and extend financial help to those in need of money. But lenders do so with profits in their minds.

Most debts incur interest payments. Nothing can hinder or prevent you from taking as many debts as you want. However, you should always consider your income and capacity to repay. Debts will have to be repaid with interest and other charges. That is why the longer those stay, the more expensive they become.

Many consumers now suffer from debt troubles. Debts may pile up until they reach and exceed a person’s financial threshold. Those can already be beyond control. You have to make sure your debt situation does not reach uncontrollable stage. Are you having out-of-control debts?

Here are five signs.

1. You are spending more than your income.

If you notice that you are spending more than how much you earn in a month, you are definitely losing a firmer grasp on your personal finance. You may figure this out by creating a personal or household budget. You can easily compute your income and deduct all your expenses from it. If the end figure is negative, you are getting out of control in your spending habits.

2. Getting multiple calls from different creditors.

Are you haunted by numerous phone calls from various creditors? It is a clear indication that your debt situation is in trouble. You may not have to avoid answering those calls. The collectors are just doing their job. Take the situation as a wake-up call. You may immediately obtain a debt consolidation loan or get into debt settlement agreements to eventually get rid of your financial obligations.

3. Taking additional debts.

Debt consolidation is like taking another debt to pay outstanding debts. Other than that, if you are making new debts just to cover your spending, you are getting out of control. Are you charging most of your expenses on your credit cards? You must assess your expenditures. Try to resist the urge to spend using your plastic cards. Live practically and frugally, at least for the meantime.

4. You become a minimum payment payer.
If you are currently paying only the minimum payment required by your credit cards and other debts, you are in a serious financial condition. You may not have enough money to pay more than minimum required. It may mean you have spent beyond your means. Making minimum payments will never help you get out of debt. Again, the longer a debt stays, the costlier it gets because of interest payments.

5. Your debt keeps on getting bigger.

Do not be surprised that even if you have minimized your spending, your credit card and debt balances keep on growing. That happens when you only make minimum payments each month. The interest rates make your balances grow further. This also means you have exceeded your limitations. Slow down and try to settle your debts even if slowly. While you are at it, try not to overspend again.

Andrew has been blogging about debt management for over 4 years specializing in credit card debt consolidation. Andrew holds a BA in Business Administration and is a regular contributor in personal finance forums.

Got further questions? Catch me on twitter and DM me @529SavingsPlans or e-mail me at 529CollegePlans at Gmail.comWant to be heard? Leave a reader comment below.

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