Six warning signs of debt (and how to manage them)

debtI was walking in the shadows of debt

Was I worried and struggling to manage debt? Was I looking for help in how to approach paying it off? You bet. If you are too, then you’re not alone and the fact that you are here deserves massive kudos, so welcome. It took me a long time to see all the real warning signs. Some are obvious. Others you get used to and accept as normal life. If you don’t have any debt (there are less of you than you may think) then that’s amazing and you should be proud. But complacency is a constant threat. The vultures are always circling and you need to be vigilant. The first step to destroying debt is forgiving yourself, but whether you carry this burden or not, recognising the often subtle yet sinister signs for what they are will help you improve and protect your financial fitness. They have certainly served me well.

Frankly, I’m amazed anyone’s reading this. When creating this blog post, I strongly doubted anyone with debt would want to click a link to read something that highlighted what they likely deep down knew already but didn’t want to face. At least not today.

I know how this feels, because this was me. I know what that gut wrench feels like when your card gets declined at the till and the ensuing embarrassment in front of your fellow shoppers. I’ve felt that sinking feeling when the cash machine reads ‘insufficient funds’ and there’s still a lot of the month left to go. And I’ve walked hand in hand with those sleeping dark shadows in your mind that stir when you subsequently put the shopping, or that meal, or that sandwich on your credit card (just to save face at the till, of course), knowing you’ve just made the problem worse.

But life goes on. We get on with our day. We put on a brave face and condemn those demons to the back of our mind once more. ‘Everything is fine’. If you’re like me, I did a great sales job convincing myself this is just a blip. ‘Maybe I won’t go out this Friday. That will help. I’m sure it’ll all be fine’.

Until next time. And it won’t be fine.

Because there will always be a next time. Until we change it. No one else is going to do it for us. We have to ask ourselves; when are you going to take action?

That was the question I asked when I looked myself straight in the eye in the mirror one morning, an expression of utter frustration and an air of mild rage at how I got myself in to this situation. How was I going to help myself out of debt?

Debt is not the preserve of the young or the poor
Debt is not the preserve of the young and the poor

Debt is not the preserve of the poor and the young

Everyone lives to their means. As your income increases, typically the more debt you take on to fund your life of new expectations and to ‘keep up with Jones’. And the ‘I deserve it’ subconscious mentality compounds this problem further.

I know I was guilty of this. In my early thirties, I quadrupled my salary inside three years. But did I take the opportunity to pay off all my debt? No. Did I take the additional pay, keep 10% for myself and save the rest? Did I heck. I’m not saying I was frivolous. At that stage in my life I was (and still am) solely supporting a young family financially. I eventually earned decent money and still do. I’m good at that bit. But I wasn’t clever with it. I didn’t have a plan. My mindset was all wrong. Had I known what I know now, I would be years ahead.

The first step is foregiveness
The first step to destroying debt is to forgive yourself


What is the first step? Forgiveness

There are many guides and systems available that you can follow to give yourself an honest and transparent account of what your real financial situation is. This acts as the foundation of your financial health plan, your schematic to financial fitness and emotional freedom.

Before any of that good stuff can happen though, we need to be honest with ourselves. We need to force ourselves to take stock and responsibility for the real situation. Then we need to forgive ourselves. Without forgiveness, there is resentment, which exploits our poor emotional relationship and crutches with money. The resentment builds as this vicious cycle subconsciously sabotages our financial health further. What’s happened, has happened. You probably had some great times along the way (I know I did, but they were always tainted knowing I couldn’t really afford them). Any hang ups about money, let them go. Annoyed you weren’t taught or set an example about personal finance by your family? Move on. This is your responsibility now. You can’t change the past and your family raised and educated you the best way they knew how. It’s time to step up and own this.

Six warning signs of debt
Six sinister signs of debt

Six debt warning signs

Today, I still have debt. But I don’t have the same stresses and worries about it, because I have a plan in place and am actively and progressively paying down the balance. I strain at the proverbial leash to get to each payday, make another payment and inch another step forward.

In fact, the biggest mental freedom comes with the new mindset that develops by doing this. As a consequence, this leaves me with more emotional head-space to enjoy my time, my family and my passions (one of which in fact is destroying debt and the pursuit of financial freedom!). The dark shadows have shuffled off to easier pickings and I want others to experience the same unshackling. If sharing this can help just one person address the situation head on and take the first important step to financial fitness, to feel positive about the future and take action, then setting up this blog has been totally worth the time and effort.

We do a good job of convincing ourselves everything is OK, or that we’ll deal with it another day. But there are clear signs, often right under our nose, that we are choosing to ignore, that we need to face up to before we can make things better.

The following six danger signs are some of the warning lights that all is not well, or at least it could be a hell of a lot better. They are not exhaustive of course and they range from the outright obvious to the more subtle. The problem is that they are not always ‘seen’. You’d be amazed of the tricks the human mind can play on itself and how it deprioritises them subconsciously. They are, however, all vitally important and must be addressed or avoided.

The six warning signs of debt are:

  1. More month left at the end of the money
  2. Declines cards
  3. Making only minimum payments
  4. Putting everyday purchases on credit cards
  5. Using payday loans
  6. Not having a budget

Let’s take a closer look…….

1. More month left at the end of the money?

In my early 20s a mortgage advisor asked if I had a little left over at the end of each month. ‘Sure’, I replied. Seemed like the right thing to say at the time. It was a lie, though. And it certainly wasn’t the case during the next 10 years with all the decadent indulgencies and debauchery which that stage of life presents itself with.

In the early days, this probably meant putting extra purchases on a credit card (I wasn’t about to miss out on that upcoming Faithless concert, was I?). Later in life, it was dipping in to my savings, which were continually being eroded, topped up, depleted again and so on.

In either case, I was compounding a problem further and missing out on a compounding opportunity.

2. Declined cards?

Seems so obvious right? But if this is happening, it’s the financial equivalent to your hair being on fire. Such situations often incur exorbitant additional charges from unplanned overdrafts etc and they are a sure sign that your financial fitness needs immediate medical attention. Ignore this one at your peril.

3. Making only the minimum payments?

Don’t be fooled by superficially low minimum payments. Lenders do this deliberately to elongate the length of the credit, all the time charging their high interest rates and making more money from you. These companies are not trying to help you, they want you to spend more and owe them for longer.

The simple way to address this situation is work out what you can afford above the minimum payment, fix it and forget it. Set up a standing order and stop spending on it (see budgeting below). In addition, check around to see if there is a card with a lower / 0% interest you can take advantage of and transfer the balance. But remember, stick to that budgeted, fixed amount.

For more information and help, refer to in-depth guides and calculators on credible sites such as Money Saving Expert.

4. Putting every day purchases on credit cards?

Since the financial crisis, UK credit card interest rates have risen by around 50%. The average credit card interest is now around 23%. Try mentally adding this amount to the cost of something when you put it on your credit card. That £4 latte just became £5 – and that only gets worse the longer it stays on your balance and increases exponentially by only making the minimum payment.

You know instinctively when you do this that it’s wrong. Budgeting and mindset will help address this.

5. Using payday loans?

One of the worst offenders of ‘bad debt’, which I thankfully didn’t get in to. These have received huge negative press over recent years due to their exorbitant interest charges. The typical interest rate of UK payday loans is 1,300% annualised. Yes, you read that right.

Furthermore, around 25% of UK payday loans are rolled in to a new loan term. Yet despite increased regulation introducing caps in 2015, the fact that they continue to proliferate shows that they are still being used and continue to exploit people.

If you have one of these loans, it must be your absolutely ‘priority one’ when organising which debt to pay off first.

6. Do you budget?

I’m amazed how far I got in life without doing this. Even when I had done it with good intentions, I’d quickly fallen out of the habit by month two. When I did do it, I was often shocked at how uncontrolled my spending was in some areas, without ever realising. Maybe this subconsciously sabotaged any future efforts. After all, if you don’t know about it, it’s not happening, right? Right?

This is the equivalent to burying your head in the sand. Accurate and consistent budgeting is the cornerstone of mapping out your plan to financial fitness.

There are many free online tools and most banks have ‘Money Manager’ type features that are worthwhile setting up. But a bog-standard spreadsheet is all you really need.

If you take one action away from this article, make it this one. Analyse your spending, open your eyes and set a budget, today. Believe me, you will feel a huge amount of positivity and relief, simply from doing something now.

Braveheart Freedom
Time to take action and pursue financial freedom

Time to take action

There are other obvious signs to be aware of, of course. Late payment fees, taking cash out on your credit card, calls from collection agencies etc.

More worryingly, perhaps, is the psychological impact and how your demeanour can become seriously affected; family arguments, trouble sleeping and using spending as a form of emotional crutch can all quickly spiral and impact your physical and emotional well-being.

Having faced the real situation, the biggest development I have experienced is the positive change in mindset and how I now look at spending. This has made the single biggest difference and propelled my journey forward at a rate I never thought possible.

Lastly, if you are worrying about debt like I was, then I want to congratulate you on having the gumption to click this link and read this post. Kudos to you, my friend. You’ve taken the first step.

Together we can get beat this.

Here’s to the pursuit of financial fitness and freedom.

FI Guy 101

This has been the first blog in our “Debt Doctor” series. The series aims to give you practical examples of how to destroy debt. If you liked the article please share, comment and follow us for more.

3 thoughts on “Six warning signs of debt (and how to manage them)

Add yours

  1. Great post.

    When I was in debt, the only warning signs I didn’t have were 2) declined cards and 5) using payday loans – these weren’t readily available back then!

    I started accumulating credit card debt when I started working full time (ironically having paid off all my student debts) and it was only after 10 years of carrying debt across numerous cards that I suddenly realised that it wasn’t ‘normal’ to live like this.

    It took me another five years to be in the clear – a combination of tight budgeting, paying off the cards with the highest interest first, making use of 0% credit card transfers, sticking to payment plans, grit and determination. I’ve been debt free (aside from mortgage) ever since but to this day, I can’t bring myself to budget and track my own expenses because I guess it reminds me of those dark debt days! Still, I seem to be doing fine without having to budget.


    1. It’s amazing isn’t it? I spent years thinking it was ‘normal’ to carry debt and I thought everyone was in the same boat!

      What was your ‘moment of clarity’ after 10 years and suddenly realising it wasn’t normal?


  2. I had felt for a while that my life seemed to be spiralling out of control, and that it all stemmed from being in debt. I couldn’t remember the last time I had a month where I was not using my bank overdraft to the max and of course, when my wage was paid, all it was doing was plugging the ‘hole’ in my bank account. I realised then that I needed to do something before it got really bad and I would end up missing important payments like my mortgage and other bills.


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