How to Know if You Are In Debt Denial

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Of all the things ripe for denial in this world, debt certainly earns its place somewhere toward the top of the list. Answer these 18 questions to help gauge where you may be on the debt denial side of things, supplemented with no-nonsense tips on what to do about it.

  1. Do you spend without a monthly budget? If you’re in debt, from credit cards and student loans to home and car loans, you need a budget. It’s the only way to be sure you’re freeing up as much money as possible to put toward your debt instead of unnecessary monthly expenses.
  2. Do you set bills aside, unopened, letting them pile up or disappear into a mess of other paperwork? Open your bills immediately, noting the due date and amount owed.
  3. Do you frequently discover misplaced, unpaid bills, past their due dates? Set up a filing system in which bills (immediately opened) are organized visibly so as to ensure timely payment.
  4. Do you wait to pay bills until the last possible day, even though you have the money to pay them now? Why wait? Paying now not only ensures prompt payment, but it’s one less thing you need to remember or worry about.
  5. Do you frequently pay your bills late? Not only does this result in late payment fees but more often than not, negative listings on your credit report. Get organized and find a system that ensures you pay your bills early or, at the very least, on time!
  6. Do you only make minimum monthly payments on your credit cards? As you probably know, you’ll never pay down the debt this way, as your payments are probably only enough to cover the cost of interest fees. Always make more than your minimum payment, even if it’s just an extra five dollars a month.
  7. Do you apply for new credit cards when your current cards are maxed out? One of the best reasons to apply for a new credit card is as a means of improving your credit utilization ratio. Granted, if all your current cards are maxed out, a new card will do the trick in this regard. But not for long if it too is maxed out almost as soon as you get it.
  8. Do you incur long-term debt in order to take vacations? If you’re in debt and the only way you can afford a vacation is to incur long-term debt, plan a more affordable mini-vacation or day trip instead. By all means, charge the trip if it’s something you can pay off within a month’s time. But if it’s an expense you’ll be paying for months, even years to come, you’re a basic principle: no debt should last longer than the item purchased.
  9. Do you spend so much paying on a debt that you have nothing left to set aside for emergency savings or retirement? Pay yourself first, period. Even if it’s just five dollars here, ten dollars there, over several years’ time, savings add up.
  10. Did you buy a more fuel-efficient vehicle only to increase your spending via a new monthly car payment? Of all the excuses to justify a major purchase, this is an especially attractive one. But do the math first! If the money you’ll save on gas every month does not exceed the extra expense of a new car payment, the gas-guzzler you already own is the better deal.
  11. Did you buy a house you can’t afford counting on a significant rise in your income 5, 10, 15 years from now? It’s not uncommon, or irrational, to believe your income will increase significantly in the years to come. But there’s no guarantee, especially in these volatile economic times. You’re always best-served buying a house you can afford now.
  12. Are you thinking about quitting your job without another lined up to cover the cost of not only your debt but also your basic monthly living expenses? If you’re unhappy at work, by all means, start pounding the pavement for something new. But avoid any rash decision that leaves you vulnerable in today’s job market. Even if you have a few months’ savings to get you by, it may not be enough.
  13. Did the size of your debt increase considerably over the past 12 months? Clearly, you’re living above your means. It’s time to go through your expenses with a fine-tooth comb and make cuts anywhere and everywhere you can.
  14. Do you incur debt for purchases simply as a means of keeping up with the Jones’? This is an especially tempting habit in today’s tech-intensive world, from iPhones and iPads to flat screens and Xboxes. Instead of priding yourself on the latest and greatest, challenge yourself and your family to hold on to things as long as possible. In other words, if it’s not broken, don’t fix it.
  15. Do you allow your partner to continually make poor financial decisions, or to influence your financial decisions in a way, that incurs more debt than is prudent or necessary? While both partners should have equal say in how shared money is spent, it is your right and responsibility to voice your opposition to spending habits that are unnecessarily deepening your debt.
  16. Do you spend money on things you don’t need while your debts go unpaid? Acquiring new things can be a fulfilling, though fleeting, experience. Try resisting the temptation whenever you can, instead of putting the amount you would have spent toward paying down your debts. In the long run, freedom from debt is a fulfillment beyond compare.
  17. Do you frequently feel guilty for spending money while debts for previous purchases go unpaid? This is your gut telling you something. Listen!
  18. Do you fantasize about scenarios in which your debt magically disappears, like the day you win the lottery or that million-dollar idea finally pays off? Your brainpower is far better utilized by taking the practical steps toward getting out of debt today.
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