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Danger Signs Your Borrowing is Out of Control

It is not a pleasant situation, but it can happen easier than most people realize. You may think you have things under control, but an emergency pops up or an unexpected situation arises, and the next thing you know you’re in financial trouble you can no longer ignore. Here are the 9 danger signs your borrowing may be out of control.

1. You have no idea where your money goes. From month to month, your paycheck comes in but you have no idea where it goes. This is a real problem, because you can’t form a plan of attack to cut back or save money unless you know where it ends up. Budget your money and keep track of all expenses.

2. You only make the minimum payments on your credit cards. This is a very expensive habit, as when you make only the minimum payment you’re paying the interest and not the principal. This expense will only grow, so if you can’t pay your balance off in full, pay as much as you can above the minimum payment.

3. Your request for a higher credit limit or a new card has been refused. Lenders will check your credit report to make sure it’s possible for you to repay them if you apply for a credit card. When the debt load is determined to be too high, any request for new or more credit is going to be shot down – a red flag for you.

4. You take out new loans to pay existing loans. This is financial quicksand and merely postponing the inevitable. The best thing to do is pay off the loans to avoid expensive interest rates.

5. You have no idea what you owe. Just because you’re not looking at it doesn’t mean it is not there. By getting a clear idea of what exactly your debt is, you have a better chance of gaining control before it becomes too much to handle.

6. You have no savings. If you’ve plundered your savings account to make payments on all credit cards or outstanding loans, it is evident things are spiraling out of control.

7. Late or missed payments. This is an indication you have too much debt on your plate and it is time to evaluate your situation to see how it can be repaired.

8. Post-dating checks. A red flag that something is amiss, post-dating checks is just procrastination of the inevitable and doesn’t help solve the problem.

9. Creditors are calling. You turn off your phone, change your number or let the voice mail pick up every time someone calls in fear it is another creditor. If you hear from them more than your mother, this is a sure sign your borrowing practices are out of control.

If you are experiencing any of these signs, it is an indication there are major problems with your borrowing and the sooner you take action, the better.



  1. When it comes to your finances, burying your head in the sand always feels the better option than to facing up to the truth. It’s good to be able to look out for a few tell tale signs that things are going a little pear shaped. Thanks very much for posting.

  2. I am amazed how some people think that avoiding addressing the problem will make it go away! When you have problems paying your bills, the very first thing to do is talk to your creditors. Do you think they won’t notice you are late?

    • @krantcents, It’s true. At work, you don’t (or shouldn’t) hide from your boss if you’re going to be late with a report. Being upfront is always the best solution.

  3. I would say taking out new loans to pay old ones is sort of ponzi-scheming yourself, and probably the most obvious of signs! Good post.

  4. I disagree with #8 to a certain extent… if you’re using your cheques as a form of credit card (ie: buying something today, but post-dating the cheque becasue you don’t actually have the money) then yes, it’s a problem. But if you’re like me and are so busy that sometimes (or more than sometimes) you forget to pay things on time because you don’t know what day it is, then post-dated cheques can be the best idea. I’ve never missed a rent payment because I always hand in a year’s worth of post-dated cheques with my lease renewal.

    And frankly, #4 and #6 have similar caveats:

    For #6: if you are paying 19% interest on credit cards, and only earning 1-2% on your savings, you’re losing 17% interest to the credit card companies so that you feel like you have a small safety net if things go belly-up. It’s smarter to pay off your debts as fast as possible so that you don’t have to pay the interest… then you can put all the free money you now have into savings to make up for lost time. (Note: this is NOT refering to contributions to retirement savings, only everyday savings – even when my financial situation was epicly bad, I still managed to sneak away some money for my retirement)

    For #4: if you are paying a ridiculous amount of interest on a loan or credit card or you have multiple debts, then talking to your bank about a new loan at a better rate is smart – but only if you don’t make the mistake of racking up new debt on your cards again. THAT is the true warning sign.

  5. On #2:

    “as when you make only the minimum payment you’re paying the principal and not the interest.”

    Shouldn’t this be that you’re paying mostly interest and only a little bit of principal?

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