Many of us are good at ignoring the negative trends in our lives. Maybe we refuse to acknowledge a growing waistline or a relationship that’s slowing deteriorating.Many people also ignore the signs of impending financial disaster. Most personal financial meltdowns happen over time. They’re rarely the result of a one-time event.
The warning signs are quite clear. You simply need to look and be honest with yourself.
1.You overdraw your checking account more than once a year. When you’re already struggling to pay your bills with your available income, overdraft fees only make the situation more challenging. Overdrawing your account can be a symptom of these things:
2.You’re at or near the limit of your credit cards. Your credit score starts to take a hit when you’re above 35% utilization. On a card with a $5,000 limit, that would be anything above $1,750. If you’re in this situation, you may be tempted to acquire another line of credit. In most cases, this is only a short-term solution with a poor long-term outcome.
3.Relying on a future one-time financial event. Counting on an inheritance or big tax return to balance to your financial situation is a sign of significant debt.
4.A failure to save any money. A deposit in your savings account can be viewed as just another expense. If you’re unable to make that payment, you’re headed in the wrong direction financially.
5.Borrowing money from family and friends is another sign of impending financial challenges. Not only is it a sign of financial struggle, it can also be a real strain on your relationships. Most of us loathe asking the people in our lives for money, so recognize the seriousness of the situation if you’re considering it.
6.You’re dipping into your retirement funds to pay your bills. Stealing from your future is a good sign that the present is shaky.
7.Using a home equity loan to fill the financial gaps. Using a home equity loan to pay bills or to purchase something you can’t currently afford is a dire warning sign. Not only are you financially struggling, you’re also putting your home at risk. Think long and hard before borrowing from the equity in your house.
If you recognize one or more of these financial warning signs, do yourself a favor and start working on a solution.When these financial conditions start to pop-up, it’s usually only a matter of time before things get significantly worse. Make strengthening your finances a priority in your life. You’ll be glad you did.
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