Synopsis: People can’t get out of debt because they don’t know or care about how serious their debts are. It is usually too late the time they realize this.

Before this, I talked about the reasons why people are in debts. After that I talked about how we can motivate ourselves to get out of debt by finding the reasons. Both articles are talking about the mindset preparation for getting out of debt.

In this article, I also want to talk about another mindset preparation – knowing how serious your debts are. In most cases, people tends to avoid the issue of debts simply because they don’t know how serious their debts and financials are. They just don’t know they are living around the cliff and under the hot water. Because of this, most people don’t really take any actions or care about their finance until the problem becomes big enough to catch their attention. I saw a lot of people never control their expenses or manage their money even they are in deep debt. It is really hurt to see that they keep buying unnecessary items while they should use the money to pay off their debts. All this because of they never pay attention on the debts signals.

The Debts Signals

So below are some of the signals that are trying to tell you – You are in debt and please pay attention on it! However, this is also the signals that people try to avoid and deny

1. High Minimum Payment. If your minimum payments of all your debts are more than 20% of your income, then your debts are too big.
2. You only able to pay minimum payment. Each month you only able to pay the minimum payment for your debt. In this condition, you are fully become a debt slave for the creditors.
3. Cash and Debt Ratio is deeply negative. One of the features I found from Mint.com, a free online money management tool, is the cash VS Debt ratio. It simply shows you the ratio between cash in your accounts and your debts. If it is deeply negative, you are in risk.
4. You can’t charge your credit card anymore. You already used up all the credit available in your credit card until you can’t charge anymore. You are 100% deeply in debts.
5. Looking for a second income/job/business to pay your credit cards. Your main income is not enough to cover both your living expenses and debts.
6. Creditors are calling you. Your creditors know how “good” your account is. If they are calling you, you are in financial trouble.
7. You are living credit card to credit card. You can’t live without a credit card because you have no cash on hands. In fact, this is a cycle where you keep on charging your credit card and keep adding the debt while you still lack of cash on hands.
8. You are worry and avoid looking at your bills. I believe that we can feel the level of our personal finance. So if you are worry or always avoid opening your bills and looking at the figure, actually your subconscious is telling you that you are in danger. So stop cheating yourself and face the problem directly.

As you know, a debt is a cycle. If you don’t do anything, you just get deeper in debt from time to time until you have to declare bankruptcy. Bankruptcy is not a joke because it just a “hell of money” for your life. So before this, please pay attention on every signal that your debts are giving you, feel it and take action to get out of it. It never too late if you start today! In fact you have no reasons to delay or procrastinate, have you?

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