Debilitating debts may sneak up on us just at any time. It is important for us to avoid being in denial, especially if we have seen so many signs that we are being dragged down into the debt trap. There are real signs that we have real debt problems. There are situations where debt could cause even more serious problems in our lives. One of the things that we should avoid is by having absolutely no saving. In this case, we may hardly have enough money. This is a real sign that we are heading into debt. It doesn’t mean that we should have $50,000 in our account, but there should be enough emergency money.
As an example, our car may break down and it is important to quickly repair our car, so we could go to office when necessary. It means that we need to have enough money so we are able to go to places that we need to go. Another situation where debt can cause even more serious problem is when we have huge outstanding mortgage balance. It means that without debt, we already have a hard time paying our monthly mortgage payment. This is a sign that our situation could get increasingly worse. In this situation, we should consider our problem and look for ways to fix it.
We may also don’t have enough health insurance coverage. If we don’t have enough insurance coverage for medical costs, then it is important to avoid accumulating debt. Just one week in hospital could incur significant amount of costs and we may require a surgery that we can’t really afford. So it is important to focus on paying insurance premium than repaying high-interest debts. The problem could get even worse if we have over drawn our account. It means that checks that we write will bounce and this could be a bad thing for our business operations. Suppliers may not be willing to work for us again and this could be a big problem.
We may also have non-productive rental property. Our property asset may not make enough money for us for specific period of time. This situation may eat up into our personal financial condition. In this situation, we should try to take care of our problem as quickly as possible, before the situation could get much worse. Another fact that we should know is that having multiple credit cards could also be quite dangerous financially. The credit card industry generates billions of dollars each year and lenders are eager to attract new consumers into their system. Once we are trapped and incurred huge credit card debts, it can be very difficult to escape.
Our debt problem could get worse if we miss payments on our loans. This is actually a very big deal and some points can be taken off of our credit score. Skipping too many payments will eventually lead to lawsuits and we are in an even bigger problem. When we have debts, we should face facts and wake up. It is important to do something essential right now or we will regret it.