Warning signs that you might be in too much debt

Many people have come to accept some level of debt in their lives, but there are warning signs that you might have gone too far.

It is common to carry debt in the form of school loans, a mortgage and even some credit card debt.

• Have you started taking out loans in order to make big purchases?
• Are you using a credit card to make car payments?

These are just some of the signs that you are going down a dangerous path.

Here’s how to identify if you’re being negatively affected by debt so you can start the process of taking control of your finances.

Many Canadians live from one pay period to the next.

If you find yourself using almost all of your hard earned paycheque to make debt payments, you are definitely living with too much debt.

Take a few minutes to gather your bills and calculate your weekly and/or monthly payments.

Do these exceed what you take home every month? You will need to start taking steps to make financial changes.

Consider selling assets like your car or moving into a place with lower rent. Be patient. Be proactive. Debt won’t disappear overnight.

Making only minimum payments might seem like a convenient way to postpone paying for your trip to Las Vegas or those dinners out with friends, but if you continue to accumulate more debt and only pay the minimum, you will never rid yourself of debt.

If you are struggling to even make minimum payments, you have crossed into a dangerous level of debt.

Call your creditor and work out a lower minimum payment, if you’ve had a good history of making payments.

Consider asking for a lower interest rate, as some credit card companies will work with you.

When you can, make more than the minimum payment and stop incurring additional debt so you can start to see your debt decrease.

When you can’t make your minimum debt payments, it doesn’t make sense to have money in your saving account.

It is tempting to try to pay off your debt by applying for more credit, but eventually you might find yourself denied credit. This is a clear sign you are carrying more than an acceptable amount of debt.

• Have you reached the point when even your minimum payments are not being met?
• Are you picking and choosing which bills you’re going to pay?

This is a HUGE warning sign that you are in debt that requires you to act quickly to get you on the right road to financial independence.