Are You Heading for a Financial Meltdown?
Would you be able to spot it if you were headed for a financial meltdown? For most of us, as long as we’re keeping a roof overhead, putting food on the table and paying our bills, we feel like we’re doing OK financially. But sometimes you have to look a little deeper. It’s possible to be doing all these things and still be headed for a financial meltdown. Let’s take a look at some of the signs to watch for:
Using Credit Cards for Everyday Purchases
If you’re using credit cards to pay for gas, groceries and other everyday purchases — and not paying off the bill every month — you could be headed for financial troubles. It’s time to work out a budget that allows you to pay for everyday expenses without relying on credit cards. If you’re not sure where to start, our Monthly / Yearly Expenses Calculator can help you figure out what to include in a budget and where your money is currently going.
Overdrawing Your Bank Account
We all cut it close once in a while. But if you find yourself regularly overdrawing your bank account, it’s a sign your finances aren’t in a healthy state. Not only is it inconvenient, the high overdraft fees make it a costly mistake that can begin a downward financial spiral that’s hard to stop. Here’s how to get by when your bank account is running low.
Not Saving for Emergencies
Not having money set aside for emergencies is a financial accident waiting to happen. Sooner or later, you’re going to have a large, unexpected expense. Without emergency savings, you’ll need to pay for it using credit cards or other forms of lending, which can start a cycle of debt that’s hard to break. Even if you start by setting aside just $20 from every paycheck, you’ll begin to build up a savings cushion.
Maxing Out Credit Cards
Having one or more credit cards at or near their maximum is a sign that not all is well financially. Chances are, you’re only making minimum monthly payments, which means it could take years to get out of debt — and that’s if you don’t charge anything more. Plus, maxing out credit cards can have a negative effect on your credit due to high credit utilization. If you have credit cards at their max, consider credit counseling, which can put you on a path to paying them off more quickly and regaining financial health.
Borrowing Money or Taking Cash Advances
If you find yourself asking to borrow money or taking out cash advances on your credit cards to make ends meet, you’ll want to stop and take a hard look at your spending habits. Borrowing money from family and friends can strain relationships if you’re not able to pay it back quickly. And taking cash advances on your credit cards just puts you further into debt. If you’re perpetually low on cash, we can work with you to create a manageable budget and suggest a plan of action to get back on track.