10 Signs that you have too much debt

It is a new year and the perfect opportunity to get your finances in order. Research has found that up to 70% of individuals stress about money on a regular basis. Furthermore, these studies have shown that 20% of people think about their financial status from time to time and only 10% never think about their finances. However, debt is a huge stress factor in our social functioning and when left unaddressed, it can lead to some serious health problems, such as anxiety and depressive disorders, as well as cardiovascular disease, diabetes and high blood pressure. But before we can just jump in and start saving (I know it is probably one of your New Year’s resolutions) we first need to identify where we stand and what the indicators of debt are.

So here are the 10 signs that you have too much debt:


  1. You do not have any savings


For many, saving means ‘Maggie 2-Minute Noodles for the rest of the month’, but it doesn’t have to be. The key to financial stability is rather the ability to save and put away for a rainy day. You NEED to save. In today’s economic climate, we can ill afford to not have a financial safety net for if you lose your job, fall ill or need to retire. Many feel that their children will look after them, but what if they themselves run into financial pressure? Do you really want to burden your children with your debt? So how much savings are enough? Well, the who’s who of the financial zoo is of the opinion that you need 6 to 9 times you salary in savings. That means your monthly salary X 9 = needed savings. Thus the sooner you start, the easier this goal is to achieve.


  1. Not having a retirement annuity

My father works for a pension fund, so I probably know more about pension funds than most 20-somethings and what I do know is… you should have started. Yup, no matter how old you are – if you are earning a steady income, you need to put some of it away towards a retirement annuity. Most people only realise the importance of a retirement annuity when it is too late. The implication of this is that you will most likely have to keep working well into your golden years, which if I may add, is not so easy, seeing as there are so many young “up and comings” in need of jobs. It also means that if you do retire, you will not be able to sustain your standard of living. Not having a retirement annuity is like planning for debt in your old age.

  1. You don’t know what your debt amounts to

The very first step in fixing any problem is knowing that you have a problem. Because debt is able to fit into our monthly budget, we tend to not pay it much attention (pun intended). However, the financial gurus look at your financial stability as a whole. Thus taking all your debt and adding it up and then comparing it to your income. Do you know what your TOTAL debt amounts to?

  1. Your credit card is on its limit

This is a big warning sign that you may have too much debt. Ideally one should stay within 30% of one’s credit limit, to be able to pay it off comfortably without accumulating too much interest. This means that if you have a credit limit of R100 000, you should only use up to R30 000. Anything more than this and your debt may snowball out of control.

  1. You make minimum or no payments on your accounts

What most people do not understand about money is that money never stagnates, it is always growing (interest) and it can either grow in a positive direction (investments) or a negative one (more debt). So by not paying your accounts, these accounts only accumulate more debt, making it much more difficult to pay off.

  1. You continue to use credit cards that you cannot pay off   

Well this one is pretty self-explanatory. If you keep using money you do not have and you are unable to pay it back, it is a sure-fail recipe for debt and financial disaster. If your credit card is close to its limit or over the 30% credit limit then STOP USING IT!!!   

  1. You are late in making your payments

This little habit speaks volumes to the financial gurus. By not paying your accounts on time, it shows firstly that you are someone that is a high risk to loan money to and secondly, you are accumulating so much interest that it is just not worth it. Thirdly, this is just plain bad money management. When it comes to finances, there are so many things that we can’t control that we have to take control of what we can.

  1. You do ‘kite flying’

This means that you are using one credit account to pay off another. This is a super bad idea, because you are not settling debts – you are merely moving them around and, with every move, comes more interest and thus more debt. Settle your accounts and save.

  1. You have been denied credit

A bank is not your friend, they are a business and their main business is money, so if they are of the opinion that you are not someone that will be able to pay your debts on time, they will simply not give you any money. Now this might seem like a good thing, however, if you do not have savings, taking out a personal loan may be the only option you have when trouble strikes. If you are denied credit, then you don’t even have that option, and then you have no means of staying financially afloat.

  1. You are lying to your friends and family about your spending

This is a good indicator that you know your spending behaviours are not on par. If you have to lie about anything, then it is probably not a good thing. If you are having financial problems, speak to the people in your life, so that they can help you achieve your financial goals.


If you said “yes” to any of these signs or this made you realise that you have too much debt, join us again next time, when we will be looking at some helpful hints and tricks to get you out from under Uncle Sam’s thumb and back in the black!


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