4 Signs Your Finances Are in Trouble
We all have months where our finances may be stretched a little thin and it’s challenging to stay within our budgets, but there is a big difference between pinching pennies and entering into a dangerous money situation where your personal finances may be in trouble. Recognizing that you are headed down a rocky financial road is the first step in changing your spending behavior and putting together a game plan to save money.
Below are the four most common signs that you may need to re-evaluate your financial habits before you start heading down a dangerous path.
1. You frequently overdraw your checking account
If you’re constantly getting those pesky notices from your bank that you have overdrawn your account, it may be a sign that your finances are stretched too thin or you’re living beyond your means. Tally up your monthly expenses first and make sure you have the income to cover them. If so, it’s likely that you are spending too much money in other areas. If your income falls short of your expenses, try to find a way to trim your bills or cancel certain services altogether.
2. You can only afford the minimum credit card payment
It’s good to always make the minimum payment on your credit card bills to keep your credit score intact. But it’s better to pay more than the minimum to rid yourself of a balance and interest charges altogether. If you find you can only pay the minimum each month, it’s time to either re-organize your budget or cut down on your spending. If you’re facing mounting debt, avoid using your credit card until the balance is paid off and seek the help of a counselor from www.ConsolidatedCredit.org.
3. You have no financial cushion
If your car broke down today, could you afford to fix it? Having money set aside for little emergencies is one of the capstones of financial health. An emergency fund – even a modest one – can help you avoid draining your regular savings or being forced to rely on credit in the face of a crisis. So if you haven’t started a separate rainy day fund, now may be the time to start.
4. You are prioritizing certain bills over others
If you are unable to pay all your bills in a given month and are forced to choose which ones are more important, it’s time to take a good look at your finances. Skipping bills will not only result in late fees and penalties, but you may also see your credit score drop as a result.