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too much debt

How to Handle Too Much Debt

Debt can be difficult to handle. When you have a lot of debt, it can sometimes seem like there are no answers. It can feel incredibly overwhelming, making it difficult to focus on anything else. When you’re struggling with debt, it becomes tough to eat well, sleep, exercise, or enjoy yourself.

The good news is that there are answers. You don’t have to live consumed by debt. Here are some tips for what you can do if you’ve borrowed too much, advice for how you maybe be able to resolve your debt issues, and suggestions for how you can live debt free again.

Signs You Have Too Much Debt

Every financial situation is different. However, there are a few common signs that a person has too much debt, including:

  • You can only make the minimum payments on your credit cards
  • You find yourself using one card to pay off another
  • You have to juggle payments and aren’t able to make a payment on each of your debts each month
  • Your debt is growing every month
  • You’re getting calls from creditors or collection agents
  • You don’t have any savings
  • You take out new loans to help you pay off existing loans

Any of these could be signs that you have too much debt. Most people won’t experience all of those signs, but if one or two apply to you, you could be carrying more debt than you can handle.

The chances are, if you have too much debt, you likely know that you do. You might avoid thinking about your debt because it’s too stressful or uncomfortable, but, when you do think about it, you know there’s an issue. Here’s what you can do to resolve your debt problems.

What You Can Do to Reduce Your Debt

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

The first things you’ll need to do is calculate exactly how much you owe. For a lot of people who have a lot of debt, it can be tough to keep track of the debt. However, if you want to solve your debt issue and eventually live debt free, it’s important to sit down, look at all of your debts, and determine exactly how much you owe. Thinking about doing this might cause you some anxiety, but it’s important.

Once you know how much you owe, look at your debts and rank them based on how much they are costing you. Your credit card debt will likely be your most expensive debt, as credit cards often have very high interest rates.

It’s also important that you make a conscious effort to reduce your spending while you’re trying to repay your debt. If you’re paying down debt, but adding on new debt at the same time, you’re not improving your situation. To solve your debt problem, you’ll have to learn to live without borrowing or paying for purchases with credit. That will involve creating a budget that makes it possible to live on cash and sticking to it. You may need to significantly reduce your expenses so that you can live on cash.

Your debt repayment costs will need to factor into your budget as well. Figure out how much you’ll need to pay each month to get rid of your debt, and then stick with this plan. You may wish to put most of your focus on your most expensive debt (such as the credit card with the highest interest rate or the card that you owe the most money on).

However, if you have a significant debt problem, you might realize that it’s too difficult for you to afford your monthly costs and repay your debt. No matter how much you reduce your spending, you may not be able to create a budget that makes it work. If this is your situation, then it’s time to speak with a licensed financial professional about your debt. For instance, a Licensed Insolvency Trustee can help you understand the debt relief options available to you.