Debt denial: 5 warning signs and how to start digging out

Saving money on debt denial warning signs does not need to be complicated. Here is a clear, no nonsense rundown of what works and how to make the most of it.

Key Takeaways

• Do you know how much you owe?
• If not, you’re not alone.
• According to a New York Fed report, Americans tend to underestimate their credit card debt by 37%.
• Now before the excuses begin”¦ ”¦ but I’m financing my wedding”¦.

Where the Real Savings Hide

Worth noting: i’m too busy to deal with it at the moment”¦ YOLO ”¦. ”¦. let me remind you that no matter how high you let the unopened bills pile up or how numerous debt-collection numbers you block on your phone, your debt will not magically disappear. Maintaining debt denial, be it in the form of ignorance or excuses, will inevitably exacerbate the problem.

• Here are five signs you may be in debt denial and stories from fellow consumers who were once there too.
• See how they faced their respective financial realities to take ownership of their debt ‘ for solid.
• More importantly, rELATED: How to get out of debt in 5 straightforward steps 5 signs you’re in debt denial 1.
• You’re rationalizing your debt as “solid” Student loans, mortgages, small business loans ‘ essentially any form of debt that has the potential to increase your wealth in the long-run is frequently classified as “solid” debt.

A Closer Look at Debt Denial Warning Signs

As opposed to auto loans, credit card bills or debts accrued while purchasing items that depreciate in value ‘ that’s “bad” debt. : Solid vs. bad: Dangers to avoid and how to protect yourself! Considering the national student loan debt is over $1.3 trillion and 43% of the roughly 22 million Americans with federal student loans are in delinquency, default or deferral ‘ I think it’s safe to say that the concept of “solid” debt has enabled some less than stellar borrowing decisions.

• Remember that monica Louie of OurDebtFreeFamily shares hers ”¦ “We didn’t think we had a debt problem since our only debts were our student loans, a home equity line of credit and our mortgage.
• We have consistently paid off our credit card balance each month, and we paid off our cars before I left my job.
• Our debt turning point occurred in July 2013.
• I had become a stay-at-home mom in May and was pregnant with our daughter.

What to Know About Debt Denial Warning Signs

As a rule, prior to leaving my job, my husband and I ran our numbers. His income should have been enough to cover our expenses, but by the end of June, we had realized that our savings were slowly dwindling.

• With my background in finance, I took it upon myself to learn how we could be smarter with our money.
• That’s when I came throughout a story of a young family who had just paid off all of their debt, including their mortgage!
• In short, hearing that story made us realize how free we would be if we didn’t have any debt.
• So we decided that we would be debt-free in eight years, by the time we turn forty!

How Debt Denial Warning Signs Really Works

We started our plan in August 2013, and since then, we’ve paid off more than $125,000 of debt!” : Paying Off Credit Card Debt 2. You’re paying  the minimum ‘ and only the minimum    “I was in debt denial for the longest time.

• Worth noting: i had about 7 active credit cards open with large amounts of debt.
• All totaling over $50,000 ‘ and that doesn’t include the over $25,000 in consumer loans I had,” shares Grayson Bell, founder of DebtRoundup. “Since I had my debts dispersed with so numerous accounts, I at no point knew how much I genuinely owed.
• I was just paying the minimums each month and thought I was solid.
• It wasn’t until my wife and I sat down to see how our finances were doing (we were talking about having a baby).

Getting the Most From Debt Denial Warning Signs

More importantly, once I put all of my debts on a sheet of paper and realized my minimum monthly payments were as much as my mortgage, I knew it was time to make a change. It took four years, but it was all paid off.” : The straightforward method to pay off your credit card debt in a quarter of the time Why pay more than the minimum?

• Since it’s pricey. The minimum payment on a credit card for instance, typically covers whatever interest you owe and a small percentage of your principal balance ‘ meaning it can take months, even years to pay off your principal.
• During that time, you keep racking up interest on the unpaid balance.
• Remember that so while the pair of jeans you purchased on your credit card continues to lose value, the amount you pay for them continues to increase when you stick to making minimum payments.
• A common misconception is that paying the minimum payment eliminates interest , false!

Tips That Make a Difference

Paying the minimum allows you to avoid other fees, but interest will continue to accrue until you get the full balance down to $0. If you can’t afford to pay off your balance in full each month, pay as much as you can, prioritizing debts with the highest interest rate first and moving the full force of your financial resources to remaining debts as you kick each one to the curb.

• As a rule, so put as much money as you can toward the card with highest interest rate, while still paying the minimums on the others each month.
• Then when that card gets to a $0 balance, move to the card with the next highest interest rate. But this is key, when you pay off a credit card in full , meaning the balance is $0, don’t close the account.
• That will damage your credit score, so just let the account sit at a zero balance.
• Implementing Grayson’s strategy of writing down your total amounts owed can also serve as the wake up call you require to stop your debt denial in its tracks.

Common Mistakes to Avoid

In short, when you see just how much of that total comes from accrued interest, you’ll probably find the motivation to pay it off as soon as possible. : The long-term cost of not paying off your credit cards 3. You keep opening new credit cards “When I was in credit card debt, I was in denial that it genuinely wasn’t a problem.

• I even opened up a new card with a 0% balance transfer rate to save on interest.
• My thinking was that I would transfer the balance and pay it off in the 12 months I had with 0% interest.
• Worth noting: i didn’t think about the fact that there was no method I was going to be able to actually make that large of a payment each month.
• But I didn’t get that far”¦ I started charging on the old card within 2 months!

Frequently Asked Questions

How can I save money on debt denial warning signs?

Compare prices across a few retailers, look for active coupon codes, and time bigger buys around sales events. Maintaining debt denial, be it in the form of ignorance or excuses, will inevitably exacerbate the problem.

Is it worth shopping around for debt denial warning signs?

Usually yes. Here are five signs you may be in debt denial and stories from fellow consumers who were once there too.

Smart Ways to Save More on Debt Denial Warning Signs

• Leave items in your cart for a day; some stores send a follow up discount.
• Pair cashback with a coupon so you save twice on the same order.
• Stack a coupon code with an existing sale whenever the store allows it.
• Sign up for the retailer newsletter to catch first time and seasonal discounts.
• Compare the final price including shipping, not just the headline number.

Final Thoughts

Before you check out, line up debt denial warning signs against current promotions and any codes you can stack. Small habits like these add up to real savings over a year.

Originally published at clark.com.