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What to Do if You Have Too Much Debt

How to Tackle The Problem Of Too Much Debt

Everyone battles debt at one time or another. And having debt can be tough to handle. Especially when we have a lot of it. The kind of debt where the pile of bills starts taking over the dining room table or credit card statements are discarded without even being opened when they arrive in the mail. That kind of runaway debt.

Too much debt can feel overwhelming to us, and it can seem like there is no way to dig out. The first impulse is to ignore it in the hope it will just go away. But that rarely works for long. Eventually, the debt pressures begin to affect eating, sleep, exercise, and relationships.

The good news? There are solutions to having borrowed too much money and having all that debt. Because no one should have to live their life consumed by the stress of debt. Here are some tips for those who may have taken on too much:

Signs We Have Too Much Debt

Every financial situation is different. There are, however, a few common signs that indicate if a person has taken on too much debt, including:

  • Only making the minimum payments on credit cards each month
  • Using one card to pay another card’s minimum each month (card swapping)
  • Unable to afford to make all the debt payments each month as they become due
  • Refusing to open bills as they arrive in the mail. The debt continues to grow every month
  • Getting calls from creditors or collection agents (perhaps threatening legal action)
  • No savings set aside to help cover some of the monthly expenses and debt repayment
  • Acquiring new loans (often payday loans) to help pay off the existing loans

Any of these warning signs could indicate debt has become a major problem. Most people will not experience all those signs, but if even one or two of the items on this list sound familiar, you could be juggling more debt than you can handle.

A Plan To Reduce Debt

If you have borrowed too much, it is important to take control of the situation as soon as possible. Not acting or continuing to make only the minimum payments on your debt will not help improve your situation. In fact, doing nothing or continuing with the way things are will only make things worse.

The first thing you will need to do is calculate exactly how much you owe. For those of us with a lot of debt, it can be tough to keep track of it all. It is important to sit down, review all your debts, and determine exactly how much you owe. Thinking about doing this might cause you some anxiety, but it is an important process that will help organize everything.

Once the numbers are written down, or entered onto a spreadsheet, rank them based on the size of each debt and the interest rate paid on any outstanding debt. Unless there are payday loans, credit cards will be the most expensive debts, as credit cards often have exceedingly high interest rates.

Now is also the time to make a conscious effort to reduce spending while working to repay the debt. Paying down debt but continuing to use credit to add on new debt at the same time defeats the entire purpose of trying to resolve the debt issues.

As hard as it might be, try to learn to live without borrowing or paying for purchases with available credit. That will involve creating a simple household budget that can make it possible to live on cash.

Try to significantly reduce expenses to allow the left-over amount to be allocated to debt repayment. Figure out how much will be needed each month to get rid of the debt, and then stick with this plan.

Do Not Be Afraid To Ask For Help

However, if you have a significant debt problem, you might realize that it is too arduous for you to afford your monthly costs and repay your debt. And no matter how much you reduce your spending, you may not be able to revise your budget to make it all work.

If this sounds like your situation, then it may be time to speak with one of Farber’s Licensed Insolvency Trustees about your debt pressures. Just CLICK ON THE FREE CONSULTATION BUTTON, below, or give us a call today. Our team will review all your options with you and recommend the best solution for your needs.