Five Signs That You’re Nearing The Debt Trap
If you recognise one, or even more, of these signs, then you need to reevaluate your financial situation immediately.
Your Income Goes on Repaying Loans
Everyone looks forward to payday, but if all of your income goes on repaying previous loans, then you need to be wary. The rule-of-thumb is you should not be using more than 30% of you monthly income on repaying previous debts, obviously this can vary depending upon your own particular set of circumstances, but if you are regularly paying more than half of your income on debts, you should reevaluate your budget.
You Are Borrowing To Fund Essentials
If you find yourself borrowing money to fund the essentials; utility bills, mortgage, etc. Then you need to seriously rethink your spending habits. Everybody has bad months, but if this is a regular occurrence, then you simply cannot afford to live. Contact our trained advisers immediately.
You Are Borrowing To Repay Loans
One of the worst/biggest causes for concern is if you find yourself taking out a loan to pay off other loans. In the right situation a consolidation loan can be great, but you really need to pick the correct one for you, and never think about short-term loans i.e. payday loans, to repay another debt. You are simply making your final total greater with each loan, and if you are struggling to repay the first, it’s only going to be more difficult for further loans.
You Are Unable To Repay Credit Card Bills
As credit cards are often one of the most costly loans available, if you find yourself simply paying the minimum repayment or, worse, can’t repay it at all, it is time to seriously look at your finances.
You Are Unable To Get Further Loans
As banks check your credit record before offering you a loan, if you are refused a loan then it’s quite a good sign that you are in or nearing the debt trap. This may then lead you on to short-term loans and less-reputable lenders, meaning much higher fees and interest.
Do You Recognise These Signs?
If you are ‘nearing’ rather than fully ‘in’ the debt trap, then you should consider taking to one of our advisers and see what we can do.
If you are indeed ‘in’ the debt trap then contact us immediately. There is no fee for our advice, and no obligation to use any of the solution we may suggest, but if you do nothing about it today, your situation is only going to get worse.
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