Early Warning Signs of Debt
- More people are building up personal debt as credit cards abound.money money money image by Tribalstar from Fotolia.com
Debt is a real problem. However, at least we are recognizing it as such, and no longer are in denial. Debt counselors and voluntary agencies are increasingly advertising their services in an effort to stem the flow of mounting personal debt and the wave of misery that comes with it. According to Progressive Debt Relief (Ref. 2), there are 1.3 billion payment cards; including credit cards, debit cards and store cards, in circulation in the United States, and the average American home has 13 payment cards. - Ideally, everyone should have an emergency nest egg set aside.savings image by Bruce Shippee from Fotolia.com
According to Kathy Kristof (Ref. 1), a person ideally needs to have a cushion of three to six months salary put aside in case of a crisis. In the case of job loss, or another unforeseen emergency, this provides a small reprieve so that a person can get back on his or her feet. Not having any cushion, or delving into the savings you have just for living expenses, is an early warning sign of potential financial problems. - Credit cards seem to make it easier to get into debt. Not only are interest rates often quite high, but psychologically, many people do not really feel they are spending when they are using their cards. It just does not seem to have the same impact as handing over money. This could be a result of the delay factor. If your credit card debt is continually growing, and you aren't paying it off in full each month, it could be a sign of trouble.
- Some people begin to worry constantly about money. This has an impact on every other aspect of a person's life, from relationships to jobs. Mounting debt can precipitate a feeling of loss of control, something that often is associated with anxiety and depression. Other people appear to react to debt with denial. In this response, bills may be barely glanced at before being shoved in a drawer. Phone calls are avoided, while letters from debt collectors go unanswered.
