4 Signs You are Carrying Too Much Debt

Being in debt seems to be suffocating. It is like a quagmire: the more you try to get out of it, the deeper you sink in it. According to financial experts, you need to have control of your expenses. If you know how much you earn and how much you are spending, you can manage to stay in a budget. It is not terrifying if you take out a debt as long as you have a repayment plan. 

People fall into a predatory cycle of debt because they keep borrowing without bothering about payments. The rule of thumb says that you should borrow money from British-lenders.uk as per your need and affordability. Savings can support you when an emergency pops up, but most of the people live from paycheque to paycheque, making difficult for them to put aside money. Here are the signs that you are carrying too much debt.
You can afford minimum payments
There is no problem as long as you can pay off the debt. The problem arises when you fail to settle your debt in one go, which adds up late payment fees and interest penalties. You are likely to carry too much debt if you can afford only minimum payments. Minimum payments cannot help you avoid interest penalties. It quickly grows the debt cycle. 
Here is what you need to do:
  • You should talk to your lender if they can put you on a lower interest rate deal. However, you need to have a good credit rating and you must have a genuine financial problem. A lender will more likely consider the case of someone who has been laid off than the one who has been running out of budget due to overspending. 
  • If your credit card balance is rapidly increasing, talk to your credit card company if they could switch you to a better deal. 
  • You can also apply for a zero-percent balance transfer deal, which will allow you to pay off all of your credit card bills on time. This deal can be very expensive if you do not settle the whole of your account within the given period. 

The lender has turned you down

Short-term loans are undoubtedly easily accessible. You just need to put in the application and the lender will transfer funds directly to your account if you qualify for the loan. Even though credit card companies and direct lenders consider applications from bad credit borrowers, it does not mean that they cannot reject your application. A lender will always want money back, which is why they evaluate your income statement. If they find that you have already been struggling with various types of debts or you have made multiple inquiries, they will cast aside you. It is likely that you will not be upon the reason for rejection, but the most common reasons are:
  • You have a very low credit score.
  • You have no credit history.
  • Your credit utilisation ratio is very high.
  • You have multiple inquiries on your credit report.
  • You are borrowing more than your affordability.

You are borrowing for regular expenses

Online lending generally aims at helping you tide over during emergency without getting into hassle of filling out lengthy application forms and waiting for a couple of days to get it signed off on, but studies have recently revealed that people are borrowing money to meet regular expenses. If you owe more than your affordability, you will definitely run out of money to meet your regular expenses. If you try to pay down the instalment, you will have left no money for your recurring expenses, and if you manage to pay off your regular expenses, you will fall behind your repayments. Whatever the side of the fence you land on, they are not favourable. Owing more than your affordability will account for taking out new debts to pay off the earlier ones. 

You spend restless nights

Of course, debt stays at the back of your mind every moment as it is your liability, but if it has affected you to the point that you spend nights awake and you have premonitions that the next call is going to be from a debt collector, you should understand that you are in an endless cycle of debt. inability to pay off a debt is the biggest sign that you are in the red. 

Final word

Getting out of debt is never a cinch, but it not impossible too. You should take actions as immediately as you begin to fall in a debt cycle. Experts say that you should create a budget to cut down on your overspending and to estimate your net worth. This will give you an idea of your affordability. You should not borrow more than your affordability. 

Description: You are into debt if you are borrowing to meet your regular expenses and you are not able to apply for a new debt.