In today's credit-hungry society, knowing how to manage your money is a must. indebtedness is essential.
While borrowing can be a wise strategy for carrying out certain projects or dealing with unforeseen circumstances, there's a fine line between healthy indebtedness and overwhelming debt.
When bills pile up and deadlines seem insurmountable, at what point do we really need to worry?
In this article, we'll explore the warning signs of indebtedness and provide guidance on when it's crucial to sound the alarm.
Because, just like an emergency siren, recognizing the warning signs can make all the difference between a controlled situation and a financial crisis. 🙌
What is excessive debt: healthy or unhealthy debts?
Excessive debt is a financial situation in which a person or entity has to repay debts beyond their ability to do so with their current income.
It's not just about having debts, but having debts so heavy that they significantly impede everyday financial well-being. 💸
When monthly debt repayments (consumer credit, home loans, credit cards, etc.) absorb too large a share of income, leaving little or nothing for essential expenses and unforeseen events, we speak of excessive debt.
This situation can result from ill-advised financial decisions, unforeseen events or a combination of both, and can lead to serious consequences such as asset seizure or overindebtedness.
Why is excessive debt a concern?
Excessive debt is a bit like having an increasingly heavy backpack on your shoulders: at first you can carry it, but at some point it becomes so heavy that you risk falling under its weight.
In the financial world, too much debt can lead to serious problems.
If someone borrows more than they can repay, they run the risk of not being able to cover essential expenses such as food or housing.
What's more, missing payments can damage your "financial reputation", making it harder to borrow in the future.
Worse still, she could lose her possessions, like her house. 🏡
Beyond the financial issues, excessive debt can cause stress and worry, affecting both mental and physical health.
What are the solutions to excessive debt: how can you help yourself?
Faced with excessive debt, it can seem difficult to find a way out.
At N. Séguin Syndic, we specialize in navigating these financial challenges.
✔️ One solution is the consumer proposal, which allows you to work out a payment plan with your customers. creditorsoften reducing debt or interest rates.
✔️ If the situation is really critical, personal bankruptcy may be a necessary step towards a fresh start, although it is a last resort.
✔️ Finally, debt consolidation is an option where we combine all your loans into one, making repayments more manageable and often with a reduced interest rate.
Every situation is unique, and at N. Séguin Syndic, we're here to guide you toward the path that's best for you.
5 warning signs of excessive debt
Recognizing a problem in its early stages is the key to avoiding future complications.
In this section, we'll introduce you to the five warning signs that alert you to potential excessive debt. 👇
1️⃣ Increased use of credit cards
Increased credit card use is often a harbinger of incipient debt.
If you find that you're using your card more and more for everyday expenses, or that your balance is constantly increasing, this may indicate a growing dependence on credit rather than on your actual income.
Let's take an example: if you used to use your credit card only for one-off purchases, and now you use it even for everyday expenses like groceries or gas, it could mean that your finances are strained and you're heading towards potential debt.
2️⃣ Difficulty keeping control of your budget and finances
Difficulty keeping control of your budget and finances is a clear sign of financial instability.
If, month after month, you find that your expenses regularly exceed your income, or that you are often surprised by unexpected expenses, this indicates a lack of budgetary control.
Let's take an example: if at the end of each month you find you have to dip into your savings or use your credit card to cover basic expenses like rent or bills, it's a clear sign that you're struggling to keep on top of your finances and are at risk of increasing indebtedness.
3️⃣ Frequently borrowing money from relatives between paychecks
Frequent borrowing from family and friends between paychecks is a warning sign of financial fragility.
When you regularly find yourself short of funds before your next payday, it's a sign that you're having trouble balancing your finances.
Let's take an example: if every month, a week before your payday, you have to ask a friend or family member for a loan to cover essential expenses like shopping or paying a bill, this not only indicates dependence on others, but also a possible spiral of indebtedness that can intensify over time.
4️⃣ The need for a co-signer to obtain a loan
The need for a co-signer to obtain a loan is often a sign that financial institutions perceive a risk in lending money directly to you.
This may mean that your credit history is considered unstable or that your current indebtedness is too high.
Let's take an example: if you want to take out a loan to buy a car, but the bank asks you to have a co-signer (such as a relative or close friend) to guarantee the loan, this is an indicator that the bank doubts your ability to repay on your own.
It's a telltale sign that your credit is weakened, and that you need to be vigilant about your indebtedness.
5️⃣ Minimum monthly payments due
Minimum monthly repayments are a clear sign that you're struggling to manage your debts.
By making only the minimum payment on credit cards or other loans, your indebtedness only increases, as interest continues to accumulate.
Let's take an example: if on your credit card with a balance of 2,000$, you only pay the minimum required amount of 50$ each month, this considerably extends your repayment period and increases the total sum due due due to interest.
It's a warning sign of precarious financial management and the need to act before the debt becomes unmanageable.
At N. Séguin Syndic, we understand the challenges that debt can present.
If you recognize yourself in any of these signs, or if you have any concerns about your financial situation, please do not hesitate to Contact us. 📱
Our team of experts is ready to listen, advise and guide you towards the best solutions for your situation.
Every situation is unique, and we're here to guide you step by step towards renewed financial stability. ⚖️
Don't wait for the situation to get worse, take control today by joining us at N. Séguin Syndic.
Your financial peace of mind is our priority.
