It was in the context of the over-indebtedness of the holiday season that Good Lender issued this warning. In terms of debt, it is often through an awareness that the recovery process begins. And for some, the time has already come. To great evils, the great means!
Warning signs that indicate excessive debt
Obtaining a cash advance on a credit card to pay the balance of another, or worse, to pay only the minimum payment required. Useful as a payment tool, the credit card is beneficial to the consumer only if the entire balance is paid monthly, thus avoiding the quasi-usurious rates charged by these institutions.
Repeatedly paying the minimum
Repeatedly paying the minimum amount on his credit cards . A large balance to pay on credit cards often demonstrates a budget inability to cope with some unforeseen or hardship of life. In the same vein, the use of credit to “finance” the acquisition of basic goods, such as food, clothes, drugs, demonstrates a financial constraint not to be taken lightly.
When the consumer ends up paying their rent or mortgage payment late , or is unable to pay for utilities before their due date. Moreover, a call from a collection agency should be a warning signal strong enough to take action.
Rate mortgages are particularly sensitive
Certain lines of credit (mortgage or non-mortgage) and variable rate mortgages are particularly sensitive to interest rate fluctuations. An increase, however small, could have a definite impact on the monthly budget of homeowners who borrowed beyond their actual repayment capacity .
This is what Mr. John, president and financial security advisor at Good Finance, , explains in his most recent post. “If you have a $ 250,000 mortgage repayable over 20 years, are you prepared to have a monthly increase of $ 276.13 in your current payments, in the event that the interest rate rises by 2%?” he questions. In fact, if reading this single paragraph suffocates you, it may be a sign that your debt is weighing more on the family budget than you expected.
Excessive repayment payments that eliminate any possibility of savings are also one of the symptoms of excessive indebtedness.