Do you think that you might have a problem or you are not sure whether your finances are getting out of control and that other people are in the same situation?
The credit crunch means that more people are struggling with their finances, and as our disposable income is slashed many may try and make up for the lost cash by taking out further debt. If you are struggling to sleep because you are worrying about you level of debt, then it is time that you faced up to the fact that you probably have a debt problem.
If you want to be debt free then you need to work out if you have a debt problem. If you want to become debt free then you have come to the right place. Debt Free can offer you free advice about your debt, call our specialist advisors on 0808 131 0039
If you can see your actions in the following five points then you may need to seek some form of debt help as you may be struggling with your unsecured debt:
1: You are spending more than 25% of your income on your unsecured debt.
Anyone who spends more than a quarter of their salary to their unsecured debt is classed as being over-indebted, according to guidelines published by the Department of Business, Enterprise and Regulatory Reform.
If this is you then you need to face up to your debt problems, spending this amount on your unsecured debt means that you may struggle to make your secured creditor commitments.
2: You can only afford to pay the minimum payments to your unsecured debt.
If you are only making the minimum payment to your debt because that is all you can afford, then this is an early warning sign of having a debt problem. Only paying the minimum about towards your debt is a dangerous way to deal with debt, as you will be surprised at how quickly your debt can add up.
If you cannot afford your debt you need to make sure that you can at least afford the minimum repayment, as bounced cheques and paying bills late will only add to your debt problems due to the charges that will be added.
3: You hide the letters that you receive from creditors
It is never a good thing if you are hiding the true extent of your debt from yourself. Try not to bury your head in the sand but instead take your first step towards positive action and escaping your debt problem.
No matter how big your debt problem is, there is always a debt solution for you and being unable to afford your debts does not mean that you have to declare yourself bankrupt. Think about if you would benefit from government help in the form of an IVA.
4: You are taking out new debt to pay off old ones but your debt levels aren’t going down.
Consolidating your debt can be a good way for you to gain financial control over your debts. However the problem comes when you pay off your old credit cards with a loan but still continue to spend on your consolidated credit. This will just leave you with higher levels of debt that you struggle to clear.
If you want to consolidate your debt into something much more manageable but without the risk of taking on extra debt, then a debt management plan might be the right solution to your debt problems. With a debt management plan, Debt Free will negotiate a lower monthly payment to your creditors. You make this reduced payment to us and we will distribute the funds as appropriate. You may find that this will reduce the pressure to meet your secured creditor payments such as mortgage or utility bills.
5: You cannot afford to save any money
It sometimes makes better sense to throw any spare cash at your debt instead of putting it into your savings. This way you reduce the length of time that you are paying off these high-interest credit and store cards.
However if you cannot afford to save anything after you have made your monthly expenses and you don’t have any extra to contribute towards your debt, then you need to start thinking seriously about your cash-flow.
If these 5 Signs of a Debt Problem sounds like you, then chances are that you may have a debt problem and it is important that you take action sooner rather than later. Keeping it to yourself is never a good idea and it is important that you discuss your debt problem so that you can seek a debt free solution.
Debt Free can offer you free professional help about your finances and we can offer you a debt solution which can help you to tackle your debt problem.
Take the Debt Free Test to see which debt solution is right for your debt problems.