Personal consumer debt has reached such high levels that if it were a disease the World Health Organization would have announced a pandemic; a dangerous one, like avian flu or the plague. Since debt is not an illness and the main institution that is supposed to monitor it profits from its rising levels we tend to ignore the symptoms until, in some cases, it is way too late.
There are straight forward ways to know, once and for all, whether you are in debt and how much: you work out the 4 numbers I was telling you about in my previous post. I know that most of you won’t, though. How do I know?
I know from experience – certain knowledge is painful and we tend to do everything possible to avoid pain. So today, I am not going to ask you to go and construct your financial history over the last five year in numbers and graphs – this can be painful.
Today, I’ll make it worth your while because I’ll tell you about the six signs that say:
‘You have too much debt; it is painful but if you don’t go and do the numbers it is going to become so much worse!’
Here are the six signs that you have too much debt.
6 Signs You Have Too Much Debt
#1. You Think ‘My Problem Is So Much Bigger’ When You Are Buying Something Expensive
This is a very interesting one. Most people who are in control of their finances either know they have enough to cover the bill, or that they will have to forego something else to do it.
People who are likely to be in debt think differently; they justify their purchase by stating that things are so bad anyway they can’t get worse. In other words, they aren’t living in reality.
To most rational people, if you are in $10,000 worth of debt and buy something for $2,000 that you don’t have the money for, then $12,000 is worse than $10,000. Unfortunately those deep in debt don’t think rationally.
Take Jon for instance. When he was in $10,000 worth of credit card debt, he never thought about buying something for $50 or $100. That amount was insignificant to what he owed. In his mind, another $100 is what $0.10 is to rational people.
#2. You Don’t Look At Your Financial Statements
This is very common behavior in people who have the feeling of impeding financial doom but not the guts to learn exactly how bad it is. It may be that you never check your balance when taking money out of the ATM. Or you have forgotten what a financial print out looks like. Or you have no idea what your password for online banking is.
I didn’t look at a financial statement for almost a decade; I know the feeling. But not looking isn’t going to solve anything. In reality it just allows the problem to get worse because you never acknowledge it or address it.