9 Signs You Are On The Verge Of Financial Trouble
If you ask someone who is mired in debt about how he got into the situation, 9 times out of 10, the individual will not be able to answer. It often “suddenly” happened. There are always many indicators when you are edging towards a financial cliff. It’s just a matter of whether you are able to identify them or you simply choose to ignore them.
Don’t confuse this with the fiscal cliff.
If you continue to excessive spend your way into oblivion, reality can really bite when you realize that you are an adult with consequences to face as a result of your actions. These are some indications that you are heading towards the unforgiving debt monster.
A budget that constantly goes into deficits
Common sense will tell you that your lifestyle is not sustainable when you are going into the red each month. You need to have an income higher than your expenses. The surplus is meant to go into savings or investments.
The problem these days is that money is just numbers. When was the last time you saw $1,000 in cash? Because of our digitized budgets, we can often fall into the overspending trap without even knowing it. Work out your numbers and see how well you are doing.
Accumulation of unpaid bills
Sure. A missed payment could be an oversight on your part. But did you really “forget” about the same monthly bills that have accumulated over many months?
Even when bills are small, paying them off can really hurt when you accumulate them over some time. There is no excuse for unpaid dues. You signed up for payment agreement and are therefore liable for them. Acting like a child and saying that it’s unfair is naïve.
The most alarming bill not to repay is your mortgage. This is the roof over your head. When you go as far as letting the payments lapse, you are inviting the fury of the lenders to come at you. The best practice is to pay your bills in full whenever they arrive in the mail. Letting them stack up can cause great hardship when you have your eyes off the ball.
Cash mysteriously disappearing
I’m sure you have had the experience of opening your wallet one day and cannot comprehend where all the cash went. And you knew you did not visit the spa that day, you didn’t give your money to charity, and you definitely did not buy a luxury hand bag.
Your cash had disappeared because you did not put in a conscious effort to keep track of your spending habits. It feels like you did not receive anything of value while your money is gone. It’s not magic. David Blaine did not play a trick on you. You have probably spent it snacks that make you fat or things that don’t make an impact on your life.
Too much of your income goes into paying off debt
Without taking into account your mortgage or rental, when 20% or more of your monthly income goes into paying off your debt, you could be tripping over the tipping point at any time.
This is the classic signal that you are in deeper trouble than you think. The main reason why you never feel that you have enough to spend even though you make a healthy income is debt. You might feel that you will fully repay your liabilities in 2 years. But the more alarming question to ask yourself is whether you will be able to last that long.
Unable to meet minimum payments
Don’t you find it disturbing and somewhat insulting when you can’t even make minimum payments on your credit cards. It is bad enough that you are unable to settle the $500 you owe on your credit card. But to be unable to pay the $50 minimum? That is a clear sign that you are truly on the edge.
Arguments over money
When you first made that vow to on your wedding day, you were probably imagining blissful nights watching the TV while cuddling on the couch. How it end up with relentless arguments over groceries and toiletries? Many household problems don’t need a lot of money to solve. But the lack of just a little money can cause relationships to boil over.
Fights and arguments over money are never sudden. They are the result of tension being accumulated over many incidents. When you realize that your arguments with your partner over money is getting more frequent, your financial troubles could be slowly getting out of hand. Because if you had money, you would have spent it to avoid these arguments.
Lenders are rejecting your loan applications
When the professionals refuse to give you credit, surely there’s more to your troubles below the surface?
Credit analysts assess loan applications based on numbers and formulas. And they have spent millions of dollars to come to a conclusion on their credit assessment guidelines. When your debt ratio burst, it burst. Take a cue from the professionals.
Loan officers will seldom disclose why an application for credit facilities is refused. But 90% of the time, you are being refused for taking on too much debt.
People write checks when they know their current accounts have the balance needed to clear it. The penalty fees associated with bounced checks are very expensive as well. So when you make the mistake of writing a check that didn’t clear when you thought it would, you have effectively lost track of your finances. It’s time to start keeping tabs on all your expenses. The only person who can give you a bailout is yourself.
You are receiving calls from debt collectors
Debt collectors are only hired by creditors as a last resort. They are pretty costly to engage. When creditors find it worthy to spend money on collectors to get back the arrears from you, you must have stepped over their line of tolerance somehow.
It can only mean that creditors feel if they don’t take extreme measure to get their money back now, there’s a good chance that they might never see their money again. They think that you are on the brink and maybe you should think the same way too.