| By :
Warren Dubrowski
For many people who end up at the office of a bankruptcy trustee in order to get help for their debt problems, the downward slide into their financial abyss was something they didn't notice happening. Those who file for a consumer proposal or bankruptcy often require credit counseling in order to diagnose what went wrong, and to learn how to approach their spending in a sustainable and responsible way. But if you can recognize the warning signs that you may be on the road to bankruptcy, you can change that downward slide into an uphill climb, and save yourself the stress and burden of excessive debt. Credit cards give us the freedom to spend money whether we have it or not, and without self-discipline, it's easy to give yourself permission to do the things listed here. No Knowledge of Your Finances: Everyone needs to live within a budget. There is no amount of income that can't be squandered; even Michael Jackson had serious debt problems. Credit counselors will tell you that they see people whose households boast six-figure incomes come to them for help. No matter how much you make, if you don't put a cap on how much you spend, you'll find a way to exceed your earnings. Credit cards make it possible. You also need to have knowledge of the amount of debt you have to pay back. Many, when pressed for the number, won't be able to tell you. Most people with significant debt will have several credit products on which they are carrying balances, and it takes work to stay on top of them. Not knowing the situation means that you're definitely not carrying out a plan to get out of debt. Considering Credit As Part Of Your Budget: In order to keep yourself afloat financially, you have to bring in more money than you spend. You have to have a surplus so you can contribute regularly to your savings and emergency fund. If you think you can afford to get something because you have enough room on your credit card to charge it, you are engaging in self-deception. You will have to pay for that item eventually, plus interest. If you approach your spending in this way as a habit, that interest piles up, and your balances swell. It becomes especially troublesome if you become accustomed to being able to spend in this way. When you become emotionally tied to having things that cost more than what you can afford, it becomes that much more difficult to cut yourself off. If you are telling yourself that you'll change your habits later, you aren't getting that you need to change your habits now. Not only will you not be able to afford new things, but because of the accumulated interest, you won't even have enough to cover the things you've already bought. One of the dangerous things about credit is that by the time your hand is forced, and have to seek out a bankruptcy trustee, you've basically forced yourself to have to change your lifestyle, thinking, and habits. Credit can be used to make purchases more convenient, but using it for instant gratification is a one-way ticket to bankruptcy. It helps to know which behaviours are actually warning signs of a serious debt problem.
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