If you have debts, when should you start to get worried about them?
At what point should you start worrying about your debts? You may think that you can manage from month to month but if that's all you're doing - managing - then perhaps you already have a 'debt problem'.
And with Christmas coming up, it's very likely to get worse if you don't take matters in hand as soon as possible. To my mind, any of the following amount to warning signs that you're sliding into the mire that is debt:
- when you're getting scared of opening letters from the bank;
- when you're spending more than 20% of your monthly income on meeting your debts;
- when you can only ever afford to make the minimum payments on your credit cards;
- when you're beginning to rob Peter to pay Paul;
- when you're taking out new loans to pay off old ones;
- when your total non-mortgage debt amounts to more than your annual income;
- when you're using your credit card for day-to-day purchases without paying it off in full each month;
- when after meeting all your monthly expenses you have nothing left over to save.
If any of the above apply to you, then don't wait till after Christmas to take action. If you decide that things are serious then don't spend money on presents for your family and friends, spend time instead.
I've mentioned before a great idea from a Fool on our discussion boards who was so broke one year that he wrote each of his close friends a letter to be opened on Christmas Day. In it, he explained that he couldn't afford to buy them a present that year but that he wanted them to know how much he valued them as friends, why they meant so much to him and how happy he was to have them in his life. Not surprisingly, he got several emotional calls on the day from several of his mates saying that the letter was the best gift they'd ever had. A priceless present that costs absolutely nothing but a bit of time and thought!
The other thing you can spend time on is reading our Get Out Of Debt centre to find out what to do about your debt problems. If you can't face handling them by yourself, go to one of the free debt advice agencies such as the Consumer Credit Counselling Service, Citizens Advice or PayPlan who will help you decide how best to deal with your creditors.
Take action to Get Out Of Debt.