When a Budget Isn’t Enough: 7 Signs It’s Time to Talk About Your Debt

People say one of the hardest things to do is create a budget. I would say the hardest thing to do is stick to a budget. Often life comes at you quickly and the things we had planned for just do go the way we expect. The most important thing with a budget is knowing what goes in and what goes out and where you can cut back that can help make a difference.

However sometimes having a budget simply isn’t enough. When you debt becomes too difficult to manage and you feel like you have overblown your budget recognizing these 7 warnings sign early will help you to understand that it might be best for you to speak to someone about what options are available to you:

1.  You rely on credit for groceries or essential bills
   If you are constantly using your credit cards, line of credit, or payday loans or lines of credits to pay for groceries, hydro, rent, internet or any other necessities it is a sign that you should be reviewing your budget as your income may no longer be covering your basic household expenses. Using credit every month to pay for necessities can create a debt cycle that becomes difficult to break.
2. Your Balances Keep Growing despite making payments
   Do you sometimes see your credit card balance grow month to month even though you have made a payment. When you see this it can be quite discouraging as your payments don’t ever seem to make a dent in the balance. If interest and new purchases outweigh what you’re able to pay down, simply sticking to your current payment routine may not be enough to reduce your debt.
3. You’re Using One Credit Account to Pay Another
   We are all familiar with the old saying of Robbing Peter to pay Paul. Transferring balances or moving money between credit cards or lines of credits is the same thing and it is only ever a short term fix. If you’re borrowing from one source to make payments on another, it can be a sign that your overall cash flow is under pressure.
4. Minimum Payments Consume Up Most of Your Income
   Minimum payments can make debt seem manageable. However, when a large portion of your available income is going toward credit card payments, line of credit payments or other debts, there may be very little left for everyday expenses or unexpected costs. You are then forced to use your credit for your necessities which only causes the balances to grow.
5. You’re Receiving Collection Calls or Legal Notices
   Collection calls, letters from creditors, or legal notices can be stressful (and annoying) and they shouldn’t be ignored. If your debts have been transferred to a debt collection agency it would be best to connect with a Trustee to get advice early and help you understand what the notices mean and what options may be available.
   Protip: You don’t want to ignore any court summons or hearing as the next step is usually a garnishment of your wages.
6. Debt Is Affecting Your Sleep, health or relationships
   Financial stress doesn’t always stay on the balance sheet. Debt concerns can affect sleep, relationships, concentration, and your overall sense of well-being. If money worries are regularly occupying your thoughts or causing tension at home, that’s an important reason to seek support.
7. You Can’t See a Realistic Way to Repay Everything
   Perhaps the clearest sign is feeling like there simply isn’t a realistic way for you to repay our debts. You might be making your monthly payments on time only to see your balance rise or stay the same. If you’ve reviewed your budget and cannot see how everything could be repaid within a reasonable timeframe, talking to a Licensed Insolvency Trustee can help you understand what your best options are.

Who Can You Talk To?

You don’t have to figure everything out alone. Depending on your circumstances, there are several places to start.

Your spouse or family: If debt is affecting your household, having an honest conversation can help everyone understand the situation and work together.
Your bank: Your bank could help you come to a payment arrangement, or other options that could help depending on your circumstances.
A Licensed Insolvency Trustee: If your debt has become unmanageable, a Licensed Insolvency Trustee can explain formal debt-relief options available that are specially tailored to you and your financial situation. A call to our office is free so there is no cost to you. We will always discuss what options we think would be best for you.

Talking to someone isn’t a sign that you’ve failed at managing your money. Sometimes, the best step is recognizing when a budget alone can’t solve the problem and starting a conversation about what comes next. Contact Chase and Associates today for your free Consultation to discuss your path to a debt free future!