You know you have a debt problem when you:
Your debt problem may be a small one that is just beginning or it may have already escalated into something unmanageable. Whatever situation you find yourself in with your debt, the first step is identifying that you have a problem.
If you are spending more than you earn frequently and you are borrowing to make up the shortfall, you have a problem. Your spending and debts will soon become unsustainable as the repayments and interest mount. The rising interest repayments will only lead you to spend more beyond your means and to make your situation spiral out of control. Draw up a budget so you can live within your means and pay down your debt.
If you don’t know or care how much you owe, you can’t be in control of your debt. When you take out debt you should be very aware of how much you owe, how you will repay it, how long it will take and how much interest you will repay in total.
If you are borrowing more money to repay your debts, you are in serious trouble. The cycle will eventually result in you being unable to make all the repayments and your interest costs will mount. If you are in this situation, it is time to make serious plans to cut your expenses so you can reduce your debt or, if you are over-indebted, you could consider going under debt review. Read more: What is debt review?
If your debt repayments leave you with too little to live on after cutting out the luxuries, it is probably because you are over-indebted. You are over-indebted if you 
are unable to meet your repayments given what you earn, your future earnings and your obligations, including your living costs.
If a credit provider gave you more credit than you can afford to repay, you may be a victim of reckless lending.
If a court finds you are victim of reckless lending it may order that your debt be suspended with no interest accruing, or that the debt be restructured.
If you are not keeping up on payments for necessary expenses, such as school fees or insurance, you probably also have a debt problem.
If you are hiding your spending from your partner or family, you probably know you are spending more than you earn and you are probably making ends meet with debt. This is not likely to end well. Face up to your problem, cut your spending and repay the debt before it becomes a problem. Cutting your spending is easiest if you have an honest conversation with your partner or family so they can support your decision.
Debt that is out of control will make you feel hopeless resulting in depression and/or anxiety. It is very stressful 
dealing with threats of having your car or home repossessed or your water or electricity cut. This stress can make you ill and create problems at home and at work.
It is possible that in order to deal with these bad feelings you may spend more impulsively to lift your mood but that good feeling will only last for a short while. You need a longer, sustainable way deal with your debt – formally or by yourself. You need to commit to a plan to deal with your debt and have the willingness to do what is required.
If you are only paying the minimum on your credit card or an overdraft, it is likely that your debt will snowball as the interest costs add up. Paying the minimum on long-term debt such as a home loan may be necessary initially when you are young and starting out in your working life. However, the sooner you can increase your repayments and work towards being debt free, the quicker you will take control of your financial situation and be able to start investing and growing wealth.
You may be denied credit because the credit you have applied for is more than you can afford to repay. However, you may also be denied credit because when the credit provider assessed you, it found you already have as much credit as you can afford. If you have the maximum credit you can afford and are looking for more, you have a problem.
If your repayments are only matching your interest and not reducing the amount you owe, you need to increase your repayments or stop borrowing more on, for example, a credit card. Your repayments must repay some of the principal debt you owe or you will never extinguish your debt.
If you are dipping into your home loan to pay for groceries, clothes, transport, holidays or any necessities or luxuries, you are going backwards. You should, as you get older, be paying off your home loan and accumulating wealth rather than ratcheting up your debt.
If you are using payday loans, personal loans and loan sharks to borrow money regularly, you have a problem. Using expensive credit like a payday loan regularly will lead to a debt spiral
Your aim should be to live within your means, to save for things you need and to have enough emergency funds to cover any financial crisis. If you are not yet there, use cheaper forms of credit such as your home loan or credit card wisely. Borrow the minimum and pay it off as soon as you can.
If you have been unable to keep up with your repayments and have defaulted on a credit agreement, it may be a sign you are in trouble. Perhaps a once-off event caused your financial problem and you can recover. However, if a financial problem caused you to skip a payment, you are probably living too close to the edge and should consider setting up an emergency fund.
If you are avoiding calls, mail and messages from your credit provider, you have a problem. It is probably because you know you have skipped a payment, you are still not able to pay and don’t want to admit it.
If you are having problems repaying your debt it may be hard to admit, but being honest and negotiating with the credit provider to find a more manageable way to repay will ultimately be much easier than ducking the calls and having the credit provider obtain a judgment against you, hand you over to a debt collector or get an emolument attachment order on your wages or salary.
If you are borrowing money to gamble or take bets, you have a problem because you have no certainty that you will win anything or win enough, to repay the debt.
Similarly, if you borrow to invest in a high-risk investment such as a single share, an untested business venture or an unregulated investment rather than a well-diversified and appropriate regulated investment, you are also likely to end up with a problem, as you have little certainty about the outcome - you may not earn the expected returns or may fall victim to a scam. Your debt will, however, certainly incur interest and need to be repaid.
