The vast majority of consumers will, at some time or another, find themselves in debt. Debt, in and of itself, is not a bad thing. Debt allows those who are not wealthy to purchase items that otherwise would be out of reach. Home and automobiles are two examples of items that might take years, if not a lifetime, to save enough to pay cash for. By using credit, which leads to debt, people are able to experience a better standard of living. As mentioned above, debt is not a bad thing, until it becomes out of control. Then it can become a very bad thing.



How can a consumer know if he or she is getting too far into debt? Here are some of the signs that might appear that consumers should be aware of.

Missing a payment because of a lack of funds: Most consumers will find themselves short of cash from time to time, but if you are missing payments on a regular basis or habitually making late payments as you try to juggle cash around, in essence, robbing Peter to pay Paul, then you may want to sit down and carefully look at your income versus your debt.

If you do not open the mail that comes from your creditors because you are afraid of what it might say, you are probably too far in debt.

When you have to regularly borrow money in order to pay your monthly bills, you are too far in debt.

If at the end of the month you are only able to pay the minimum payments and there is no cash left over for savings, you are probably heading for trouble.

So what can you do to alleviate these debt problems?

There are actually a few things you can do and it all starts with planning.

There are two basic documents that you need to start with: An income statement and an expense statement. It is very difficult to know where you stand financially if you do not understand how much money is coming in and how much money is going out. These are easy to create and they are filled with power once you have them finished.

Your income statement is simply a list of all the income that you have coming in. Your expense statement is probably going to be longer and will take a bit more time, but it is important. List all of your expenses including rent, auto payments, insurance payments, credit card payments, etc. Try not to forget anything.

Subtract your expenses from your income and that is your disposable cash for the period. Some people may have a negative number, meaning they are spending more cash than they are getting in. This is a sure sign of trouble.

If your disposable income is a small amount or a negative number you may want to continue reading some of the other useful articles we have available for you. There are certain actions you can take to help get you out of debt or at least reduce the strain that it has on your income. Working on your debt issues is time well spent.