Like many consumers, you could be in a financial predicament without realizing it. You may think you're managing your debt, but in reality your debt is managing you. Poor money management is the number one reason consumers experience debt disasters. If you suspect you might be on the brink of a financial disaster, here are five tell-tale signs that you need to make some serious financial adjustments.
You're Regularly Using Multiple Lines of Credit
If you're robbing Peter to pay Paul, pretty soon your financial house of cards is going to come crashing down around you. Sustainable debt management plans never include increasing credit limits or opening more lines. Additionally, having multiple lines of credit open is a huge precursor to bankruptcy for many consumers.
You're Carrying Credit Card Debt for an Extended Period
If your open lines of credit are maxed out and you haven't paid them off each month, you're setting yourself up for financial failure. According to the Foundation for Credit Counseling, 1 in 3 adults in the US admitted to carrying credit card debt from month to month. Some people can make it work, but this habit is like setting up dominoes; eventually everything is going to collapse leaving the consumer deeper and deeper in debt. If you have a large amount of credit card debt, here are some tips on how to work your way out of it.
You're Using Credit to Pay for Daily Essentials
If you're using your credit cards to pay for gas and groceries you're not using your lines of credit appropriately. Credit cards were never meant to supplement your regular income. Treating your credit cards like an extension of your paycheck will only lead you deeper in debt and an inevitable financial crisis.
Your Debts are Increasing While Your Savings are Shrinking
If you're not paying yourself first, you're not managing your money properly. Having a healthy savings is essential to weathering future financial setbacks. If you have a healthy amount built up in savings, you're less likely to rely on credit to escape financial difficulties. Additionally, you should be saving up for your retirement years as early as possible in order to build up a decent sized nest egg. If you feel like you are drowning in debt with no way out, you can look into debt settlement or consolidation to see if it will help.
You're Having Trouble Keeping Up With Monthly Bills
You'd think this would be an obvious sign of financial trouble, but if you've had issues paying bills for an extended period, you may just think your salary is too low or your boss is cheap. This might be true, but if you're paying late fees and overdraft fees on a regular basis, it's best to change your habits and your thinking before a financial emergency happens.
Money management can seem like a complex process, but it's really not. These signs of impending doom can be reversed if you pay close attention and adjust your financial course accordingly. The biggest thing you should remember is that it's important to be aware of your spending habits instead of functioning on autopilot.