Just because you are currently paying all your bills more or less on time it does not mean that you are not carrying too much debt and you can ignore debt consolidation ( www.consolidationdeal.com.au ). Debt can be very addictive and the majority of people who are in trouble with lifestyle debt do not really wish to admit that they have a problem.
“Debt problems are like any other addiction, and admitting that you have a problem is the first step to resolution.” – Consolidation Deal consulting team
Do you occasionally miss a credit card or a bill payment? Perhaps you are mostly up -to-date, but make your payments a little late and sometimes wait for a second reminder before paying? That can be a classic sign of someone who has debt problems.
Cards at close to limit
Are some of your credit cards pretty close to the limit? Do you look to take on a new card when that happens instead of paying down the debt on the existing cards? If you do this is a debt problem in the making.
Continuing to spend
Are you continuing to spend money on credit despite not being able to reduce any of your existing debts? You probably do understand that this kind of behavior cannot continue indefinitely. Are you counting on a Tats lotto win to repay your debt?
Only make minimum required payments
People who have a debt addiction generally do not make more than the minimum set payments on their credit cards. They live in a world where all you need to pay is the minimum, forgetting that their debt principal is costing them thousands of dollars every year.
Using cash advances to pay bills
This is another common strategy used by people who have serious debt problems. They run out of money between paydays and resort to taking out small cash advances to cover a bill that they should have budgeted for. They often need to take out cash on their credit card while waiting for their next pay.
Not sure exactly how much you owe?
Do you know what your debts are? What about how much interest your outstanding debts are costing you each and every year? Remember that to pay these debts you need to first earn the money and then pay tax on your earnings. Therefore if your interest costs are $3,000 every year then you probably need to earn $5,000 just to cover this cost (not even touching the principal).
It can be hard admitting that you have a debt problem. However once you do, and put a plan into place to reduce your debts, you will feel a whole lot better.
Write down all your debts, loans and set repayments. Then write down all your sources of income. People who are always behind generally see that more money goes out than comes in. This is where a budget is essential to help you start afresh.