13 Warning Signs That You Have a Debt Problem

If you're not sure if you have a debt problem, Laura breaks down 13 warning signs you should know. You’ll learn red flags to watch out for that could prevent you from building wealth and solutions to turn around your financial life.

Laura Adams, MBA
8-minute read
Episode #564

8. You overdraw your bank account.

I don’t know too many people who have never accidentally bounced a check—even me. However, if you’re paying expensive non-sufficient funds (NSF) fees on a regular basis, it’s probably because you’re spending more than you make and have a debt problem.

The cure is to create a budget so you know what your expenses are and how much you earn. Aggressively cut back on all unnecessary expenses and brainstorm ways to increase your income at the same time.

9. You don’t have savings.

Even people who aren’t in debt can make the mistake of not saving. But if you’ve drained a savings or retirement account to pay off debt or to pay for everyday living expenses, that’s when you know you have a debt problem.

If you don’t have savings, you’re living on the edge, financially speaking! Any unexpected expense could send you into a tailspin that causes you to go further into debt. Make a plan to radically cut your expenses and begin setting aside as much as possible each month in an FDIC-insured savings account.

Having cash on hand is the best way to avoid having to use debt in the first place. It’s how you’ll keep your head above water if you have a large unexpected expense or loss of income.

Make a habit of saving (even small amounts) to your emergency fund. Start by setting aside 1% of your income until you have several months’ worth of living expenses as a cash cushion. Then make a goal to save a minimum of 10% to 15% of your gross income in a retirement plan at work, an IRA, or a retirement account for the self-employed.

See also: Should You Pay Down Debt or Invest?

10. You’ve been turned down for new credit.

If you’ve recently been denied credit or can only qualify at a high rate, you may have poor credit, too much debt, or both. Review your credit using a free site such as Credit Karma or AnnualCreditReport.com to make sure there isn’t any incorrect information on your credit reports.

To learn more about how credit scores are calculated and how to raise your credit, read or listen to the podcast version of 7 Essential Rules to Build Credit Fast

11. Your finances cause you to lose sleep.

If you’re so worried about your debt and bills that you can’t sleep at night, you certainly have a problem. Financial stress can lead to trouble focusing on your work or poor health.

Losing your job or business income is the last thing you need when you already have money problems. So, make a plan to deal with your debt and get your stress under control as quickly as possible.


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.