Reality finds us one way or another. Either we are quick to accept the truth of our finances, both the good and the bad, or we’ll be forced to accept it once the numbers become too insistent to ignore. As with everything in life, it’s far easier to fix a situation when recognised early. Credit card distress is incredibly common and can either be a financial hiccup or a serious financial handicap. Recognising that we’re not coping, relatively early on, can be the difference in that scenario. Here are 8 signs you’re in distress and need a new plan and maybe a phone-a-friend.
Your Credit Balance Is Rising Faster Than Your Income
There’s no magic ratio, but if your monthly credit balance is rising and your monthly income has remained static or is dropping, then credit distress is not too far around the corner. It’s important to retain a capacity to pay off our cards, even when using a lot of credit.
You Bounce Between Cards
Can’t fit it on the Mastercard? Give the Visa a swipe. Can’t pay off your monthly utilities? Use a third party cash advance. Using several cards to juggle our credit card debts is only immersing ourselves further in a debt cycle, and only covers up the issues for a limited period of time.
You Can’t Keep Up
It’s easy to have a bad month. Or slip behind once in a while. But if you’re unable to catch up, then you’re looking at an early sign of credit card distress. Reframe your budget for the next month about catching up on the card, whatever disposable income is required to do so.
You Pay Bare Minimum
If you’re not clearing your card at the end of every month, you’re looking at a clear sign of distress. If you’re only able to make the bare minimum, it’s essential that something changes so you can pay off your card more quickly.
More Credit Than Cash
If you’re using your card for essentials- groceries, utilities etc- and out of a lack of funds, then the budget is out of whack. Using credit out of necessity, and for basics, are classic warning signs of financial duress.
You Need Extra Work
If you’ve picked up extra work because you’ve decided to rid yourself of credit card debt once and for all, all power to you. If you’ve picked up extra work because you can’t keep up with your own rate of credit accumulation, then it’s time to leave the card at home.
You’re Using Your Savings
Experts differ as to the role of savings in credit card debt. Some suggest saving and repaying debt simultaneously. Others are far more concerned with saving money by quickly paying off interest. That said, if you’re continuing to use credit and need to use your savings to pay it back, cut up the card.
You Would Be Unable To Pay If Things Changed
If you lost your job, would you be able to pay your credit card? What if you needed emergency cash? If you don’t have the equity in your life to cover your credit, then it’s a signal of distress.