I recently met up with Rabbi Kasongo – a Senior Debt Expert working for Intelligent Debt Management. My intention was to pick his brain on issues of debt. I posed a number of questions to him, and his answers were so potent that they sparked in me a desire to start the Zonotho debt series.
Since prevention is better than cure, the first question I asked him was:
‘What are the key signs that my debt is, or may soon get out of control?‘
This was Rabbi’s response:
“What you are actually asking for, is signs of ‘over-indebtedness’. Over-indebtedness is a state where your income is no longer able to sustain your debt obligations and financial expenses. Simply put, it is when your cash outflow is higher than your cash inflow specifically due to debt repayments and commitments. I’ll give you some tell-tale signs you should be watchful for in your own, a close friend, or a family member’s behaviour.
Number one: You are excessively using credit facilities (credit cards or overdrafts) to buy the most basic of necessities. For example; meals or fuel for your car.
You should be able to afford these without credit.
Number two: You consistently borrow (month to month/once off loans) to pay off other loans . That is, you are paying off debt, with debt.
This is not sustainable.
Number three: You are in arrears on your credit report. You have missed (or are about to miss) one or more credit payments due to insufficient funds.
If this happens often (i.e. more than once in a year) your credit level is likely too high for you to continue like this.
Number four: You have a huge overdraft facility (i.e. a facility that is almost as high, or higher, than your salary). A similar sign is when you find yourself increasing your overdraft, or credit card limits in order to make purchases.
You most probably cannot afford your lifestyle.
Number five: You have emotional distress (queue panic attacks) due to financial issues or lack of money.
Your peace of mind is very important. This is a sign that you should be getting help.“
If one or more of the signs above relate to you, you are either heading towards, or are already over- indebted. This does not mean that all is lost. Depending on your situation, the solution could be a sober change in behaviour and lifestyle, an arrangement with your creditors for a less strenuous payment option, or a call to a debt counsellor. It is possible for you to be financially free. My follow up question is covered in get yourself out of debt. (This is a link :))