6 Signs You're Headed Towards Debt

With today's economy, more people are moving towards the use of loans, credit cards, and other forms of credit to pay for their lifestyles. Without missing a beat, credit card companies and banks are jumping at the opportunity to push people into debt and bankruptcy. These are eight signs you're headed on the path towards debt and that you should curb your spending or face the consequences.

1. You are working more to keep up with your spending. If you're working overtime - and need to - then there is a serious problem with your spending. You need to slow down and match your spending to your work, not the other way around. Try living on $100 a week (including rent) and see if you can pull it off. After that, anything more will be luxurious and your spending will slow down.

2. You cannot pay more than the minimum on your credit cards. If you're carrying a balance, especially if you can only pay the minimum, it's a sure sign you need to stop spending and wait until your balance is paid off to continue running up charges.

3. You are using one or more cards to pay off another. If you have to borrow money (go into debt) to pay off debt, then this is a positive warning that you're heading down a dangerous road. If you should have to do this, go for a personal loan or get a second job, living frugally to pay off your debt, rather than borrowing more money.

4. You have too many credit cards. Too many is defined here as more than "a few," relative to your income. If you make $5,000 a year, you don't need more than one credit card (if you even need to have one at all). If you're using all of your cards, or they all have a balance you won't pay off at the end of the month, it's time to do some introspection on your spending.

5. You have met the limit on all your credit cards. If you're seeking a credit limit increase just so you can hold a higher balance, there is something wrong. A credit increase is a good idea when you're going to be applying for a mortgage, as the usage of your maximum credit is important, but if you're not going to be able to pay the new balance off at the end of the month, don't do it.

6. Your spending has increased, but your income has stayed the same or is heading downwards. If you're spending more money but making less, this is a sure sign you're on your way towards debt, as it is a mathematical impossibility you will be able to afford it at the end of the month. If you're experiencing this, put your credit cards in the freezer and live off of cash for a while. When the cash has dried up, so does your spending. End of story.

Hopefully nobody is experiencing these signs, but if you are, beware, as you are well on your way to being one of those people interviewed on Oprah who've run themselves into $100,000 of credit card debt.