There is no person, in this world, who has not run into a financial problem and faced a lack of money, at some point. Sometimes it is caused by a sudden, unplanned event, such as a major breakdown, damage to a house or apartment, a car… Sometimes it is a difficult situation, such as job loss, illness, or a global crisis, which affects everyone. Some people have savings, and they deal with such situations more successfully. For some, it is difficult and then they get into serious trouble. Lack of savings does not always have to be caused solely by low earnings or excessive spending.
Sometimes it happens that we have already invested money in something, such as renovating a living space, educating children, some significant purchase or investment. Although we may have had a plan and a favorable financial construction, it is possible that we will suddenly have a higher, new and unplanned cost and then we get into trouble. Then everyone thinks of a loan, because it is the fastest and most efficient solution that comes at the right time. But caution is needed, because we can very easily cross the line and find ourselves in the problem of over-indebtedness.
1. You do not know the exact amount of debt
When going to the bank, taking a loan, or borrowing, everything seems simple, easy, tailored solely to your needs. Relieving that we will solve our problem can make us react quickly and without much thought and analysis and jump into something we do not know enough. It is necessary to be informed in detail about the conditions of our borrowing. What is the interest, what is the repayment period, are there any hidden costs, what is the amount of the installment … Only after detailed and accurate information, analysis of our monthly income and expenses, can we dare to go into debt. If we don’t, we will soon have the first warning sign, so we will realize that we are in a hurry and borrowed too quickly.
2. Too high monthly installments
This problem is directly related to the previous one. You may not have inquired in detail about the borrowing terms. You need to calculate the cost of living and indebtedness in relation to income. If you do not do it rationally and adequately, you will be left for half a month without sufficient means of subsistence and basic necessities. This is a situation that requires urgent intervention. This can be in the form of part-time work, which could provide additional income, or in the form of rigorous savings and reduction of basic costs.
3. You don’t think about money when you pay by credit card
One way to over-borrow is uncontrolled credit card use. It is possible that at some point, you have a considerable amount on the card and this encourages you to buy both what you need and what you do not really need. It may seem like a great opportunity to buy something big in installments, without thinking in advance how much it will empty your card. Here is a situation in which you would certainly not like to find yourself. It is a sure way to get into trouble and over-indebtedness.
4. You don’t know exactly how much your income is
Do you ever face the fact that you are deluding yourself about the amount of your income and about your real possibilities? Avoid talking about it with your family? Not to tell the truth about your finances, but on the contrary, to construct a false reality and untruth? To avoid social contacts so as not to reveal your financial troubles? Such behavior is not good for you or your environment. You get involved in a lie and sink deeper and deeper, you inevitably fall into anxiety and depression, you lose credibility and you follow a path that leads to nothing good. Instead of doing that, do just the opposite. Tell your problem to people, seek advice and, consult with several of them. Someone must have been in a similar problem, they will help with their advice and suggestions. Maybe they will offer you a way to make more money and your situation will turn for the better. Do it on time, because this behavior can have far-reaching consequences for your entire life.
5. You do not pay the debt on time
Harmful behavior, such as avoiding the truth about one’s finances, is also avoiding dealing with incoming bills. The fact that you will not open accounts, but put them unopened in the last drawer and pile them up, will certainly not solve your problem. Such childish and immature behavior, generated by sticking your head in the sand, speaks of your misjudgment and the problem of debt. It is complicated and difficult to get out of such situations, so it is best to prevent them from happening.
What to do if you are over-indebted?
If you are already in debt and feel the hopeless situation that is pressing you more and more every day, think about the way you will solve this problem. It does not mean that things are permanently unsolvable. If you understand and recognize that you are in trouble, here is the first step to its successful solution. So react immediately, don’t take action. You can contact the lender, agree on some debt extension, lower monthly installments, or a refinancing loan. This website can give you more answers about debt consolidation. It is best not to borrow even more, but if there is no other way out, try to improve the situation that has stalled. A good way, as we have already mentioned, is to find an additional source of income, and maybe another member of your family could do it, so the relief would come faster. Sometimes a serious reduction in daily needs brings considerable savings, which can help increase the budget.
Keep in mind that debt-free borrowing is big trouble you get into. Not only does it endanger us financially, but it disturbs and can permanently destroy our family and friendly relationships. It can also destroy our health, because constant worry and stress affect our mental and physical health. Therefore, before each borrowing, make a detailed plan, a realistic financial construction, stick to what you have planned and go to repay your debt as quickly as possible.