too much debt

How do you know if you’re in too much debt?

04 May, 2016

How do you know when you’re in over your head? The concept of “too much debt” is different for everyone, but the warning signs are the same. Perhaps you’re starting to find it a bit of a juggling act managing your mortgage, car loan, and a couple of credit cards?

You’re certainly not alone; ING DIRECT statistics show 38% of Australians have a mortgage; 83% have a credit card (and 67% of those have two or more); and 21% of households have a personal loan. Multiple sources of debt means multiple sources of interest, and those charges can start piling up faster than you realise.


The build-up of debt

Personal debt levels tend to creep up over time, just like our weight. You don’t just wake up one day and find you’re 10kg overweight and none of your clothes fit anymore. It happens gradually over time; you find your clothing becoming a bit tighter, you can’t move around as easily as you used to, and eventually you have to admit you’ve let things slip.

In the same way, unless you suddenly lose your job or are hit with a big bill for something unexpected, debt becomes unmanageable over a period of time.

It might start with a home, a car, a holiday or two on a credit card, and before you know it you’re relying on that card more and more to pay for everyday expenses like groceries. The monthly repayments are adding up, you’ve reached your limit on your card, so your only option is to dip into your savings. You might even consider taking out another loan.

Your finances are at tipping point, then your car breaks down and the savings fund you had set aside for emergency expenses like that is almost gone. You decide to skip your mortgage repayment for a month with the intention of making it up next month, but of course you’re already struggling so that money is hard to find.

In the end, people risk losing their homes, their livelihoods, and even their super savings in an attempt to clear their debt. In the most drastic of cases, bankruptcy may be the only solution.


Knowing you’re in too much debt

For most people, it doesn’t need to get to the point of missed repayments for them to realise something is wrong. Feeling constantly squeezed at the end of each month should be enough of a sign that your finances are in need of some attention – just as feeling the squeeze on your waistline as you get dressed should tell you that you need to watch your weight. But the stress of feeling that your debt is getting out of control can cause great anxiety and affect your personal and work life, so it’s best to take action as soon as you identify the problem.

Unfortunately, as with weight loss, there is no quick and easy solution to a debt problem. It will take time and perseverance to turn things around, but as you gradually whittle away at your debt you will feel a gradual sense of relief and freedom. Bankruptcy really is a last resort, and one that relatively few people need to consider – even if they do find they have taken on too much debt.

Keep browsing our articles for plenty of specific guidelines and actions you can take to get your debt under control.


In summary:

  • You probably know when your debt is starting to get out of control. Don’t ignore that feeling
  • Before you get to the point of skipping repayments, take some action
  • The process may be slow and painful but you can successfully reverse your debt problem


take control of your debt

Why it’s important to take control of your debt

02 May, 2016

The good news is that debt can be controlled, no matter how bad you might think it is. The unsurprising news is that the only person who has the power to take control of your debt is you. Some professional advice along the way might help, but your financial advisor isn’t going to accompany you on your shopping trip to decide whether you really NEED those jeans.


Act now to get in control of your debt

It can be tempting to deny that you have a problem or just hope that if you ignore it for long enough it will go away. But when it comes to money, in fact the very opposite is true; the longer you leave it, the more interest you will accrue and the worse the problem will become. So stop postponing the inevitable and take action sooner rather than later.

To become the master of your debt you need to regain control of your money, especially your expenses. Breaking your bad spending habits can be a painful and testing process, but it’s worth it if it means you can live free from the stress of unmanageable debt.


More money, no problem

Don’t be fooled into thinking that a higher income will solve all your money problems. People have an amazing ability to spend just within their limits, so a higher income just gives the mindset that it’s ok to spend more.

In any case, it’s not much use relying on a hypothetical higher income in the future to solve the debt problems facing you right now. If you do get a better job or a pay rise, that’s great, because you’ll be able to put it towards clearing your debts quicker. But for now you need to focus on saving more, which means making the most of the money you do have available to you now.



  • YOU are responsible for YOUR debt
  • You can take control of your debt but it will get worse the longer you leave it
  • Don’t wait until you have a higher income; work with what you have now
  • Be prepared to rein in your spending for quite a while