UNITED STATES—Having financial independence is what everyone aspires to achieve. Getting your own income and sorting your own bills gives you satisfaction, as you are able to live by your own means without depending on anyone other than yourself.

Financial independence however comes with its own responsibilities. When you have an income managing it appropriately is a key requirement to ensure that you are free of debt and you are able to pay all your bills on time. Failure to manage your finances will lead you to financial troubles and too much debt.

One just doesn’t fall into debt; there are warning signs that you have a debt problem. When you start to struggle financially the pressure of lacking enough money mounts and you start to miss payments that facilitate your day-to-day life.

Here are the warning signs that will show you that you have a debt problem;

  1. Being late to pay bills and your credit card

Most of the services we use are billed on a monthly basis. That may include power, house rent, or mortgage. When you start to miss payment deadlines for these essentials and find yourself frequently getting calls demanding the monthly payments you are in financial trouble, which is a debt problem.

In this situation, if you have a good credit score you can get a credit card to bail you out of your financial troubles. It should be however realized that a credit card eats up your income and when you result to a credit card to solve the debt problems you might end up failing to make credit card payments for the following months.

The immediate consequence is a bad credit score that will leave you without a credit facility and pilling bills.

  1. When your credit card is over the limit and gets declined at the point of sale

When you register for a credit card with your financial institution you are issued your credit card limit, which is determined by your credit score. This gives you the advantage of being able to make a purchase or clear outstanding bills.

When you spend more than your set limit the transaction may be declined. To avoid this you are required to always spend below your limit. The most advisable is always to keep your utilization below 30%.

In instances where you find yourself unable to pay down your credit and maintain an arrangement where your credit continues to eat up your income then you are having a debt problem. The results of this will have you failing to make payments on time, as your finances will be always directed to paying debt rather than settling bills. This will push you to take a personal loan that will add up to your debt burden.

  1. You lack savings

To be adequately prepared for future eventualities that are out of your control or to achieve certain goals that improve your standards of living you must have savings. These savings provide you with financial security.

You can come up with a structured plan to have a section of your income directly transferred to a savings account of your choice. This service is provided by banks, you can have a savings account that cushions you in instances of; retirement, loss of job, emergencies, or homeownership.

When you are unable to save money or lack any savings then you need to realize you have a debt problem. Savings help you invest in the future and that means you have future financial responsibilities that you need to secure in the current time.

Another instance is when your debt is increasing instead of decreasing in a downward trajectory. That could mean that you are spending all your income with nothing to save for future expenditures.

  1. When you use debt to refinance another debt

Having multiple debts is understandable provided you can service them on time and remain with finances to cater for your bills and savings.

If you are eligible to have multiple credible streams, that’s an indicator that you have a good credit score and a stable income. At times one is tempted to overspend and repay using credit.

The moment you find yourself getting a loan from one financial institution to service debt in another credit institution then you risk getting into too much debt.

Using debts to finance debts can get you into deep financial troubles that may lead to you being bankrupt or your assets being repossessed.

  1. If you have frequent interactions with debt collectors.

When you are unable to service loans or you fail to pay your mortgage on time the financial institution that furnished you with the money or asset engages debt collectors to claim their dues.

If you find yourself in that situation the biggest probability is you have defaulted multiple times. At this point, you will find yourself dealing with threats of repossession of assets or if they have access to your wages they may end up trimming them.

Due to panic, you might find yourself making financial decisions that might sink you into too much debt than you handle. Some of these decisions may be taking advance payments from your monthly income or disposing of essential assets that aid your day-to-day activities to make quick money.

When the calls persist, this is how to stop debt collectors from calling and repossessing your assets. Make sure you repay your debts on time or have a payment plan so as not to affect your credit score.

  1. You overdraw your bank accounts and your checks bounce

When you lack enough money you might request your bank to give you an overdraft. This is being able to withdraw more money than you have in your account. The service also comes with charges. When you find yourself having a lot of overdrafts then you are having a debt problem.

Also when you issue checks that don’t go through and keep on bouncing then that means your account or accounts have no money. When these checks bounce and you overdraw you will be obliged to get more loans, which is a direct indication that you have too much debt.

It is obvious that debt can put you into many financial troubles and incapacitate you from executing personal development projects or make your life unbearable. To assess whether you are walking into a debt situation or are about to have a debt problem check on the issues named above. Aim to restructure your income, credit, and savings to avoid the signs of having debt problems that will lead to bankruptcy.