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Coping with Life's Struggles: Debt Problems

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Warning Signs of Debt Problems

Debt isn''t something that just happens as you go about your daily routines. There are certain spending habits that lead to debt. Recognizing these habits now could save a lot of money and stress later.

1. Spending more money than you make: This doesn''t sound logically possible. If you only make $1,000 a month, how could you possibly spend $1,200 in a month? It''s easier than you think. So easy, you might be doing it. Dipping into savings, borrowing from others, and using credit are the primary ways of spending more money than you bring in. You might be able to get away with doing this for a few weeks or months, but soon, your hole-digging spending habits will catch up with you. Before you know it, your savings is depleted, your credit cards are maxed out, and you can''t borrow any more money.

2. Spending money you don''t have: Usually, spending more money than you make is enabled by spending money you don''t have, by using credit cards and taking out loans. When you use these instruments to pay bills and make purchases, you''re creating debt. If you can''t repay the debt each month, it will continue to grow.

3. Using credit for ordinary purchases: You should use cash to make everyday purchases like groceries, gas, clothes, and entertainment. The appeal of credit cards is the ability to pay later for items that you buy now. Using credit instead of cash is a bad habit, especially when you don''t pay your credit card bills in full each month.

4. Using credit when you have cash: One of the quickest ways to get into debt is to choose to use credit when you have the cash to make a purchase. People do this with a "something for nothing" type of mindset. They want to receive the goods (or services) but they don''t want to pay for them. The convenience of leaving your money in your wallet comes at a cost. Chances are, if you don''t want to pay for it today, you''re not going to want to pay for it tomorrow.

5. Using debt to pay off debt: When you use credit cards to pay off other cards and loans to pay off other loans you''re not paying off anything. You''re just shuffling your debt around and incurring more debt each time you do so. Balance transfers have transaction fees and most loans have some kind of down payment or origination fee. So when you use debt to pay off debt, you end up worse off than when you began.

If you have found yourself over your head in debt, consider seeing a financial counsellor for guidance and advice. You may contact the Greek Welfare Centre for support and referral.

Useful websites:
* credit about
* Australiandebtcounsellors.com.au

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