How to effectively deal with debt problems

Do you know you could have debt problems and not know it? The interesting thing about it is that it is not difficult to identify you have debt problems, yet many people still lead their lives oblivious to the fact that their level of debt is a problem. Generally, you are in serious financial trouble when your monthly debt exceeds 20 percent of your income, excluding rent and mortgage costs. Stop for a moment and look at how you live. Can you spot signs of debt problems in your life?

Signs of debt problems

While there are no fast rules that establish you have debt problems, there are tell tale signs that indicate you may be deep in problems with debt. Ask yourself some basic questions to find out if you have debt problems:

  • Do I have financial problems that never seem to end?
  • Do I find it difficult to pay my bills?
  • Am I able to save money and keep track of it?
  • Do I generally spend too much money?

If your answer to these basic questions is yes, then you most likely have debt problems. The following are a few more concrete signs that you may be in serious financial problems with debt:

  • You are only able to make minimum payments on your credit card repayments
  • You often don’t have enough money in your bank to offset rent, utility, mortgage and housekeeping costs
  • Your total level of debt continues to increase every year and you can’t fully account for the increase
  • You are regularly charged interest by your bank for exceeding the agreed overdraft limit
  • You have more going out than coming in on your income expenditure.

If you discover you have debt problems, the next big question you likely have is how does one deal with debt problems.

What to do about debt problems

Just like there are no fast rules that establish debt problems, there are also no fast rules to deal with debt problems. However, if you want to manage your debt, increase your income and reduce your spending.

Bring in some extra money whenever possible to give yourself extra options for paying your debt. For example, check if your tax code is correct and claim any tax benefits entitle to you. Also, sell items you no longer need to generate some extra money to offset your debt.

Keep your debt in check by reducing your spending habits. For example, reduce your regular spending on housekeeping costs, insurance, mortgage and utilities. Also, keep your personal spending on things like clothing down to the minimum.

Remember, dealing with your financial problems properly will not only reduce your debt and stress factors, but also contribute to a happier, more fulfilling life for you and your family.

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