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Do you live on the edge, ignoring the warning signs you’re in financial trouble? Lots of people do.
They frantically pay bills each month making choices of who to pay out right, who to put off and who they should pay with credit cards.
It’s an anxiety-provoking experience each month filled with dread and worry.
Does this sound like you?
Maybe somewhere in the corner of your mind, you think you might be in trouble, but it’s something you try not to think about it.
You recognize you have debt, but is that the only indicator you might have money problems?
Having too much debt isn’t the only sign.
8 Warning Signs You’re In Financial Trouble
1. You Have No Savings
The Red Flag: You have either no savings or well below the recommended $2000 to cover emergency situations.
The Problem: You don’t pay yourself first and are unconcerned with your long-term financial situation.
The Solution: You need to develop a budget and carve out money each month to put into savings so you can build an emergency fund and stop using credit cards.
Read: The Joy of Saving
2. You Have No Idea How Much Money You Have In the Bank
The Red Flag: You use your debit card freely and without any consideration, assuming you have money in the bank — but you’re not always right. You rack up overdraft fees on a regular basis.
The Problem: You’re wasting an enormous amount of money on overdraft fees that would be better spent reducing debt.
The Solution: Get your head out of the sand! You need to get in the habit of checking your bank account balance on a regular basis (daily if you can, but no less than weekly) and studying your monthly bank statements to get a grip on where your money goes and how you can better control it. Convert to spending in cash only and get reconnected with your money.
3. You Use Your Credit Card To Pay Monthly Expenses
The Red Flag: Because you’re not sure what’s in your checking account you pay for groceries, gas or other credit card debt by using your credit card.
The Problem: You’re adding to your debt and not living within your means.
The Solution: You’ve got to get a handle on your spending and fast! Review your budget and look for areas where you can cut back (eating out, groceries, personal care, etc.finacial). Maybe you need to downsize or change where you’re living and perhaps relocate somewhere cheaper, or seek out opportunities to increase your income, whether it’s a different job or a second, part-time job.
4. You Avoid Opening Bills and Credit Card Statements
The Red Flag: You’ve got a stack of unopened mail sitting on your desk waiting to be opened. Or, you have gone the paperless, and the list of bolded emails have gone unread. You also refuse to answer calls from 1-800 or unavailable numbers.
The Problem: You are drowning in debt.
The Solution: You need to answer the phone or call whoever you owe money to and explain your situation. You might not believe it, but most companies are willing to work with you to figure out a payment plan that offers you some relief while ensuring that they continue to get paid.
5. You Continue Making Purchases on Your Credit Cards
The Red Flag: “I’m already in debt. What’s another $100?” You use rationalizations and justifications for adding more debt to your already out of control credit card debt.
The Problem: You are resisting necessary change. It’s easier to continue bad habits than to do the hard work it takes to develop good ones.
The Solution: Avoid temptation by cutting up or locking away your credit cards. Delete all the secure credit card information from your favorite online retailers to make it harder to make online purchases. Also, when you find yourself justifying an unnecessary expense in your mind, say it out loud. Chances are, hearing the words will help you catch yourself before you make another mistake.
6. I’ll Do This Just Once
The Red Flag: You know you shouldn’t make financial mistake like tapping into your 401 (k) or using a cash advance, but you convince yourself you’ll only do it ‘this one time.’
The Problem: Once you go down that road and commit your first financial crime it’s really easy to become a repeat offender. This can really add up to serious financial troubles.
The Solution: Don’t do it. Period, end of story! If you know, it’s wrong, and a complete financial mistake (which you know it is) don’t even go down that road.
7. You’re Paying Off One Debt With Another
The Red Flag: You transfer one credit card balance to another card in an attempt to pay off the balance with a no interest rate card. Or you refinance your mortgage to cover credit card balances or student loans.
The Problem: You live way beyond your means. And balance transfers, while beneficial in some cases, are often the result of credit card abuse combined with a lack of discipline to pay off the debt.
The solution: Put your fixed loan payments on auto pay and organize your debts with a clear action plan to pay them off as fast as possible. Use either the snowball or avalanche method. Call your creditors to negotiate lower rates and create a customized payment plan if necessary.
8. You Ask Family or Friends for Money
The Red Flag: If you can’t afford an expense and have to ask someone for a loan, you’re probably already in financial trouble.
The Problem: Using other people as a crutch hinders you from ever achieving financial security and freedom. If you don’t let yourself fail or say “no” to yourself, how will you learn from your mistakes and ultimately make better money decisions?
The Solution: Rather than asking family and friends for a loan, ask the to help you on your mission to achieve financial freedom. Ask for their guidance and plan to check in with them on a regular basis. Having an active partner in your financial freedom program will help you stay on track and accountable.
It’s never too late to change your circumstances and to get out of trouble. Start by downloading my
Start by downloading my Good Money Habits Guide. It’s got lots of practical ways to get a handle on your money and start turning your situation around.
The good news is your financial situation can be turned around with a solid plan and a commitment to getting out of debt.
Turn your troubles to triumphs.