Are You In Debt Trouble?

Debt Trouble

Starting off on a road to debt trouble can be an easy thing to do. Not only is it so tempting to buy the latest and greatest televisions, computers, phones, or cars, but getting a loan or credit card is a really simple and easy thing to do.

With a quick 5 minute online application, you could be on your way to buying that new car, driving it all the way into debtville. We tried it out ourselves just to see how easy it would be and within 2 hours of applying online for a loan, we had $10,000 deposited into our account (Don't Try This At Home!).

That being said, if you are responsible and discplined with your income, and your loan repayments, debt isn't always a bad thing. If paid off properly, and comfortably, you can go on a nice holiday or upgrade to a more efficient car, plus end up with a good credit history at the end of it.

But how do you know what the right amount to borrow is, or how much debt is too much debt?

How Much You Can Safely Borrow

Banks will let you borrow way more than what you realistically should borrow. Sure they have their own safeguards and checks to make sure you could technically repay the loan they are giving you, but they don't take into account your lifestyle. Say you earn $500 a week, the bank would reasonably offer you a loan which would have you making repayments of $130 a week. That mighten sound like much at first glance, you still have $370 pure profit left over per week right? Well, not quite. Think about what you do each week. Do you use petrol to get to work every weekday? $10 or $20 worth? How about your lunch breaks, do you like to buy your lunch everyday, $10 sandwich and drink meal maybe? And you can't possibly go without your morning coffee, $3 a day?

So far we are up to $115 a week, and thats just on the regular, everyday things. How about we add in a few more things. That phone plan that you always go over, that's an extra $100 a month. Like going out on the weekend? Add in atleast $50 for that.

Assuming you don't have to buy groceries or rent (living with your parents), you're now left with $180 a week. If you are a fan of buying a new outfit everytime you go out, wanting the latest video game, or even going to dinner once or twice a week with friends, you could find yourself really struggling. Especially if you have been living without that extra $130 a week repayment for a while, not having to worry about money.

Signs You Have Too Much Debt

If you've never had money issues before, one, your lucky, and two, you may not be aware of some emotional issues that come with having too much debt. Some of the main ones are:

  • Constantly thinking about money, bills, due dates, your bank balance...
  • stressed out, anxious, tired all the time
  • finding it hard to sleep at night
  • feeling hopeless
  • not opening your mail
  • ignoring your creditors
  • never paying on time, missing payments
  • resentment of friends and family who spend money

How To Get Debt Help

Many people assume a government debt agreement would be the safest option. No banks, no more loans, no more worries, right? Wrong! If you can find another way to get your debts under control, you should. Government debt agreements can ruin your credit rating for the rest of your life, they can also stop you from getting any loans or borrowings for 7 years. Be careful of the debt help companies you see advertised on TV as well, these companies have a tendency to charge hundreds or even thousands of dollars to simply sort out your government paperwork for you. Make sure you kow what you are signing up for before you agree to anything!

Consider getting a personal loan to consolidate your debts, calling up your creditors and ask for longer to pay off your debts or a payment plan, ask your boss for an advance if that will help. Try anything and everything before you sign up for a government debt agreement.

If you would like to know even more about how dangerous these debt agreements are to your credit rating and your future, see our Personal Insolvency Guide Here.

If you need more help managing your debt, contact DebtFix here, for a free consultation.

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