Life is a constant stream of financial incomings and outgoings, and it can be difficult to keep tabs on them all the time. Some people have a natural inclination toward order and restraint when it comes to expenditure while others might get slightly carried away. Occasional indulgences may not be anything to worry about, but when they become increasingly frequent they can lead to significant debt problems.

Unfortunately, the true cost of debt is high. It can result in mental and physical exhaustion, a feeling of desperation and increasing isolation. However, you are not alone. Excluding mortgages, the average Canadian is $21,164 in debt. But, how can you tell when your overspending habit has become a more serious impediment?

1. You refuse to acknowledge existing debt

Active refusal to acknowledge debt often occurs when you instinctively know you are in trouble, but addressing the problem is too overwhelming. As such, you ignore past-due notices, avoid opening mail or emails relating to debt, you dread answering the phone and you don’t look at your bank or credit card statements. If you have got to this stage, you might believe that ignorance is bliss, but in reality, the strain could be taking a toll on your mental health. Addressing the issue head-on is the only way to resolve your debt problem.

2. You are borrowing from Peter to pay Paul

When people are drowning in debt, they are often tempted to borrow from one lender to pay off another. This is a real warning sign that you have a problem that needs addressing. It is never an efficient means of paying debt and it can, in fact, cause a vicious cycle that is desperately difficult to overcome.

3. Your savings have disappeared

It is likely that from an early age, you have been taught the value and importance of savings. A rainy day fund could prove integral should an emergency arise. If you have long since spent your safety net, it is a clear indicator that you might have a debt problem. Consider what this money was spent on and what you have to show for it now. Similarly, if other means of emergency cash, such as your bank overdraft, have been spent then it is more than likely you are spending beyond your means.

4. Your debt-to-income ratio is slipping

Consider the amount of money you spend each month paying off debt. If you are spending more than half of your income, it is a very serious indication that you have a debt problem that requires immediate attention.

5. You often feel stressed, depressed and helpless

The mental repercussions of serious debt are not something to be taken lightly. Individuals with debt are far more likely to suffer from depression than those who are debt-free. This ultimately results in a lack of inclination to take care of general health. Those who are suffering from severe debt-induced stress might notice a lack of sleep, a loss of appetite and decreased interest in hobbies that once provided a great source of happiness.

Such emotional distress can become debilitating and incur a general feeling of hopelessness; a serious indicator that you should seek assistance. You may feel that your situation is beyond help, but studies have shown that individuals who get help in the form of a debt management program can seriously improve their mental health.

What to do if you think you may have a debt problem

If you have noticed these behaviours in yourself or a loved one, it is important to act. There are ways in which you can deal with and manage your debt. By acknowledging and coming to terms with your financial situation, you can open the door to a multitude of healthy and effective debt reduction methods. You can also find free, confidential one-on-one help from a local non-profit credit counselling service near you.

About the Author

Yaakov Smith is an Oxford graduate with nearly twenty years’ experience developing and designing software.  He is the owner and founding director of Logican Solutions, a UK-based company that supplies business management software and consultancy to streamline processes and increase productivity. They offer a range of products, including solutions for claims management, debt management and property portfolio management.