Debt denial can be costly.
It’s obvious why. If you don’t believe you have a debt problem, you won’t try to change your spending habits, and you’re going to keep doing what you’ve been doing — and make your financial issues worse.
And maybe your financial problems aren’t all that bad yet, which can make it even easier to stay in denial. If you’re paying your bills, for instance, and you’re able to muddle through the holidays and get your shopping done, maybe you don’t have anything to worry about.
Maybe you don’t. But if you’re wondering if there are any signs you should be looking for, that are pointing you toward the road to debt and financial ruin, take a look for these landmarks.
[See: What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments.]
You tell yourself things will be fine, but you don’t do anything to improve the situation. Maybe the numbers are climbing on what you owe your credit cards, and you haven’t slowed down your spending or increased the payments you’re throwing at the debt. Or maybe your bills are being paid later and later, and, again, you aren’t making any effort to pay them earlier.
Or maybe you work for yourself and aren’t paying estimated taxes.
Abby Eisenkraft, CEO of Choice Tax Solutions in New York City, says she sees that a lot with self-employed people.
“Since many people who are self-employed were previously employees and received a W-2, they are used to having someone else remit their taxes,” Eisenkraft says.
Eisenkraft says she had a client who never paid her taxes throughout the year and would always find herself with an enormous bill come tax time that she couldn’t pay.
It eventually totaled one million dollars, Eisenkraft says, adding: “She was way in over her head. And she refused to change her ways.”
If any of this sounds like that could be you someday, then you may be in debt denial.
[See: 25 Ways to Fix Your Finances Fast.]
You often take chances that in hindsight, you have no business doing. Calculated financial risks are one thing. Maybe you buy $10 worth of lottery tickets, and you almost never do it, and you can easily afford to lose 10 bucks if you don’t win anything. Or maybe you’ve invested in some stocks or bitcoin, and, yes, it’s $1,000, but even if you lost it all, you know you’ll be fine. Those are arguably calculated financial risks. You hope everything works out; you’ll be OK if it doesn’t.
But when you take chances that are, in hindsight, or even immediately, dumb, you should start questioning your judgment. Are you taking foolish risks with your money because you’re hoping to get out of debt, in which case, that should be a signal that you’re in too much debt? Or is your behavior going to eventually lead you into debt?
For instance, a lot of people start their own businesses, and generally, that’s a good thing that should be celebrated. That said, too many people start or buy companies having no idea how to run one, according to Billy Funderburk, a certified financial planner who operates a wealth management and financial planning practice in Longmont, Colorado.
He says he has seen too many people say, “I’m tired of my corporate America job, and I want to own my own business.”
Funderburk adds: “This story usually ends with a $250,000 hole in their retirement nest egg and a need for that corporate America job again.”
What’s the problem? Many people wind up getting in over their heads.
“Corporate execs are specialists and small business owners must be a generalist,” Funderburk says. “There is always a blind spot for the corporate exec, and they are in a sprint to learn what they don’t know before their money runs out.”
If any of this sounds like that could be you someday, then you may be in debt denial — or a candidate for someday being in debt.
You get stressed out over money and start eating … or smoking … or drinking. Whether it’s a cigarette, or eating out of a carton of ice cream, or popping open a few beers, if you’re doing that after doing something like paying bills or discussing money with your spouse, that’s a major red flag, says Emily Shutt, a certified money coach in Philadelphia.
“When someone starts to feel like their finances are getting out of control, they tend to cope through overeating, overdrinking or even overexercising,” she says.
If that sounds like that is you right now, then you may be in debt denial.
[See: 11 Money Tips for Older Adults.]
You’re often fighting with your spouse about money. If the arguments and disagreements are happening more frequently, you may want to start questioning whether your cash flow has been drying up lately, or maybe not enough money is going toward paying down debt, and thus there isn’t as much money to go around these days.
“Fighting about money isn’t always a sign, but often is,” says Sean Fox, co-president of Freedom Debt Relief, a debt settlement company headquartered in Phoenix.
If that sounds like that is you, you may want to evaluate your financial situation.
You’re continually coming up with creative ways to make your dollar stretch. Creative ways, that is, that could end very, very badly. Fox says that if you’re often taking advantage of, or seriously entertaining, multiple credit card balance transfer offers, that may be a bad sign.
If you’re using your credit cards to sustain your lifestyle and carrying revolving debt (that last part is key), then Fox says that may be a problem.
Also a bad sign, Fox adds: “Avoiding opening bills or credit card statements.”
And if all of that sounds like something you do, then you are definitely in debt denial. In which case you may want to talk to Eisenkraft’s client, the one with the million-dollar tax bill. You two probably have a lot in common.
More from U.S. News
8 Financial Steps to Take After Paying Off a Debt
11 Money Moves to Make Before You Turn 40
5 Signs You’re in Debt Denial originally appeared on usnews.com