Sometimes it can seem as if financial trouble just shows up out of nowhere to wreak havoc on your life. One minute everything feels great, and then the next minute you’re deep in debt with creditors calling you non-stop.
Of course, this isn’t the way it really happens. Debt never just comes out of nowhere – there are usually signs that could give you an indication that something has gone wrong. Without knowing these signs, you may end up a lot deeper in debt than you need to be. The key is to recognize these 11 signs of financial trouble and do something about them before it’s too late.
- You don’t have a budget. Not having a budget doesn’t necessarily mean you’re in financial trouble, but it’s certainly an indicator that you may be, or are at least on your way. It’s far easier to overspend and get into financial difficulty if you don’t have a clear picture of what’s coming in and going out on a monthly basis. Find out how to make a monthly budget.
- You have no savings. If you pay your bills for the month and look into your account and see nothing, it’s like sending disaster a personal invitation. In today’s world, not everyone is going to have the recommended 3 to 6 months’ worth of living expenses as an emergency fund, but it is important to have something to fall back on.
- You use credit to pay bills. When you start using your credit cards or lines of credit to pay bills such as utilities or rent, you know you’re in some trouble. At best, this practice is a short-term fix that might keep you going for a little while longer. At worst, it’s a great way to max out all of your credit and get into serious debt problems.
- You fight about money often. Not every couple is going to live in perfect financial harmony all the time, but if you find yourself fighting about money often, it may be a sign you’re in trouble. If the fighting stems from using credit, not having enough to go around, or long-term financial goals, you definitely have a problem. Communication is key in a marriage, especially around money, since it’s one of the leading causes of divorce.
- You only make the minimum monthly payments. That minimum payment amount you see on your credit card statement each month might make you feel like you’re doing right by your debt, but that simply isn’t the case. By paying just the minimum payments, you’ll end up paying far more in interest in time, and it’s a surefire way to let future creditors know they should stay away from you.
- You miss bill payments. If making minimum payments is a bad idea, then missing them altogether is really bad. Nothing will mess up your credit score and credit rating more than a string of missed payments on your report.
- You find yourself borrowing money from friends & family. It’s always nice to have the support of friends and family in your life, but if you start relying on them to help pay your bills, you’re definitely in trouble. Not only are you going to create bad feelings and possibly damage relationships, but when they ask for that money back, your credit may end up taking a big hit.
- You have unpaid taxes. Unpaid back taxes may not seem like a big deal, but they have a tendency of adding up very quickly, and the government is pretty adamant about getting them back. Whatever your reason for having a balance, it’s wise to sort it out and start making payments before it really gets out of hand. Find out what to do if you can’t pay your income tax.
- You’re using payday loans. Many people who are burdened by debt think that payday loans are a reasonable solution to their debt problem. Payday loans are short-term loans usually up to $1,500 that can help individuals get through a rough spot. Although it may seem like a great idea because these types of short-term loans can prevent you from falling behind in your debt payments, you’ll actually incur more debt through this method through their notoriously high interest rates.
- You’re considering bankruptcy. If you find yourself considering an extreme financial solution such as bankruptcy, it’s definitely time for help. The first thing you’ll want to do is seek the help of a credit counsellor to help you figure out if bankruptcy is actually the right solution for your debt. If you head straight to a bankruptcy trustee, they may lead you down the path of bankruptcy instead of looking at other alternatives. A credit counsellor can help you figure out the best way forward with the least amount of repercussions.
- You ignore your financial statements. Ignoring financial statements altogether is a major sign that financial trouble may be at your doorstep. If you get that sinking feeling every time you see a statement in the mailbox, and then just set it aside for later, you’re only fooling yourself.
If any of these signs sound familiar to you, you likely need financial help. Contact our accredited counsellors today for a free consultation. We can help you get back on track!