Signs your debt is out of control

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Do you find yourself wondering, “is my debt out of control?” Credit has become an essential part of American life, but at the individual level, it can be all too easy to fall into a spiral of debt. If your debt is out of control, it will show. If the symptoms on this list feel familiar, there are tools to help with getting debt under control.

10 signs your debt is out of control

1.You struggle to keep up with minimum payments

Not making the minimum payments on a debt is not only a sign that your debt has grown larger than your resources can handle and that it will also spiral. When minimum payments aren’t made, you still owe the money, but other fees are usually added as well. Your credit rating will also take a hit when you miss your minimum payments, and this can make getting out of debt even harder.

What you should do: Stop using credit cards immediately so the minimum payments do not increase. See if you can allocate funds from less-important expenses, such as from subscription services or extra treats when you go grocery shopping, to help keep up with the payments.

2. Your debt grows every month

If you’re gaining debt faster than you can pay it off, stop using credit. Even if you stop as soon as you realize what’s happening, you may need to seek financial help and advice for paying off what you owe. Debt will always be able to grow faster than it shrinks if we let it. If we could afford to pay it off right away, most of us wouldn’t take out the loan in the first place. Using this knowledge means pacing your debt acquisition so that payments don’t exceed what you’re able to spend on them.

What you should do: Stop using credit cards immediately and consider seeking financial help. You may want to speak with someone who can help you evaluate your finances and find ways to avoid adding to your debts.

3. You’re not saving any money

If all of your money is going towards necessities and debt payments, focus on paying on those debts and clearing up your finances. This will likely require creating a strict budget for your money. Even having a small amount of money saved can make a massive difference in your long-term financial stability. If a costly emergency arises and you can pay out-of-pocket to deal with it, that’s another debt that you’ve avoided taking.

What you should do: Make a budget and pay yourself first by automatically withdrawing money to your savings account when you get paid.

4. Your credit score is suffering

One of the factors that alleviate the negatives of debt is that paying off debt builds up your credit score. If your debts are causing your credit score to sink instead, it’s time to take action. The lower your credit score sinks, the higher your interest rates will rise. Because this dip in credit often accompanies being unable to pay what you currently owe, this situation can get out of control.

What you should do: Raise your credit score by lowering the total amount that you owe and consider consolidating your debts.

5. Debt collectors are calling

Once debt collectors start calling, things are getting dangerous for your finances. If your debt is sent to a collection agency, the odds are good that your credit rating will go down and that late fees have been added onto what you owe.

What you should do: Make at least the minimum payments on your debts to avoid your debts going to collections.

6. You’re living paycheck to paycheck

When every paycheck disappears nearly as fast as it arrives, you can feel that you’re walking on thin ice. Any emergency in this situation is likely to throw you into more debt you can’t afford. Once you pay off the debt, rework your budget so you can allocate the money that was going towards payments towards your savings account instead. This can keep you from ending up in this situation again, further down the line.

What you should do: Double down on paying off what you currently owe. Consider using one of the popular debt-repayment strategies and then rework your budget to prevent debt in the future.

7. You’re hiding your debt

If you find yourself hiding your debt — whether from your spouse, your family or yourself — come up with a strategy for getting out of this situation. If your plan for dealing with debt revolves around denial, your debt problem will only grow. It can be difficult, but it’s essential that you make a comprehensive list of what you owe, both in total and monthly. Once you’ve begun to face the debt and put it through some organization, the intimidation of it lessens and you can start paying it off strategically.

What you should do: Make a written budget to get a handle on your total amounts owed or use an app that is designed to track debts and expenses. Ignoring your debt won’t make it go away.

8. You’re losing sleep over finances

Sleep is the cornerstone of a functional human. Once you start losing that because of your debt, it will make everything harder. Not only will your debt seem more daunting to deal with, but daily life may feel lackluster and tedious. At this point, it can be wise to employ the aid of both a financial advisor and a therapist.

When you aren’t sleeping because of financial anxiety, it can feel hard to justify adding any new expenses even if they are for your wellbeing. In that case, your next best bet is to research debt-repayment strategies. Find a plan that helps you gain a sense of empowerment over your debts so you can start sleeping properly again.

What you should do: Consider finding a fee-only financial planner or a therapist. Taking care of your physical health will help you take care of your financial health as well.

9. You have to borrow money to keep up with living costs

If your debt has grown so large that it’s taking most of your income to cover it, your situation is dire. Taking out more credit to cover living expenses and necessities will only add more debt, and if your debt is already taking all of your income, you can’t afford to add anything to it.

What you should do: Consider forbearance options for some of your debt to lighten your debt load.

10. Your credit cards are maxed out

Credit cards can spiral out of control quickly. Ideally, you should be paying off your credit card each month. In reality, that isn’t always feasible, but it serves as a good baseline for how to keep your credit card from reaching or exceeding its limit. If it does exceed the limit, your bank may increase your interest rate or tack on other fees.

What you should do: Budget to make your monthly payments as large as you can until you get the card paid off.

Tips for avoiding debt

Numerous methods and resources can help you regain your financial stability. When looking to establish debt control, these suggestions can be a great place to start:\

  • Start a minimalist budget: Make a budget that covers the necessities and then puts everything else towards paying off your debt. The more money you can save by budgeting, the quicker you can pay off your debt.
  • Pay cash: Some people have trouble visualizing how much they’re spending when they pay with a credit card. If this sounds like you, consider paying cash for your purchases. This can help make sure you don’t spend more than you earn.
  • Consider strategic repayment of your debt: Use one of the many debt-repayment strategies to pay off your debt in a way that will be most effective for you and your situation. Numerous strategies exist, each with their own strengths.
  • Look into debt consolidation: Some debts can be consolidated into a single, monthly payment. A debt consolidation loan can help with keeping track of what you owe, but it can also lead to a lower interest rate, depending on the circumstances.

Next steps

Debt can spiral out of control faster than many of us realize, but there are strategies, options, and experts to help with these situations. So, next time you’re thinking, “my debt is out of control,” check the list and if the symptoms fit, utilize some of the debt control tools. If your debt has gotten out of control, don’t let it overwhelm you, act. It won’t go away on its own, but with the right help and approach, you can get out of the debt spiral.

Written by
Dan Miller
Points and Miles Expert Contributor
Dan Miller is a contributing writer for Bankrate. Dan writes about loans, home equity and debt management.
Edited by
Loans Editor