Debt Trajectory: Are You Headed For Debt?

All the signs are there, but you can't see it: you're headed for debt, lots of it, and you aren't doing anything to stop it.

Most of the time, you always have the best intentions when it comes to money and how you spend it and try to save. But the reason you are headed for debt and don't do anything about it happens for a variety of reasons.

You like being able to buy things.

You confuse a want versus a need.

You have a significant expense and immediately look toward a loan.

Your budget is more of an exercise in futility than actually being executed as such.

Being headed for debt is something we all can feel and see coming but we choose ultimately to ignore the signs.

The budgeting process is what has to change, but how can you notice (and pay attention) when you're headed for debt?

First and the easiest is if you are having a hard time paying your bills. If what you make and what you owe each month are running neck and neck with each other and you have no money leftover, you've got budget issues that need to be addressed immediately. The general rule of thumb is that you should have about three to five percent of your income set aside for paying yourself, a term that merely means you have to put money in your savings account first and then pay your bills after that.

Another huge red flag that you are headed for debt or don't value saving money is when you hold off on paying your bills so that you lavish yourself in gifts or make it a point to buy gifts for someone else (such as during the holiday season). At the end of the day, you should pay your bills on time to help your credit score, for starters, but if the money is on hand, and available your bills should take priority over a vacation, shopping spree or anything else that isn't your responsibilities (mortgage, car payment, utilities, credit cards etc.)

Finally, if you're paying bills with credit cards, again your budget is something that should be called into question. Your bills should be paid with your income, free and clear so if you're using credit cards for bills, that means something from your budget needs cut so that you not only can eliminate credit card usage but have the opportunity to save money.

Once you get into significant debt, it's hard to find your way out of it. That's why if you have any inclination that you're heading in that direction, taking a detour and reevaluating how you spend is paramount.