Are you financially overextended? Here are the warning signs that clearly indicate that you’re in financial trouble. Don’t just read about them. Do something before it’s too late!
Ever thought of reaching an economic utopia where you wouldn’t have any financial troubles? Your bills would be paid on time and in full, you wouldn’t depend on loans and you’ll have lots of money at your disposal. Sounds like a dream world, right?
But, there are a few people who have reached that stage in their lives. But most of the others, like us, are struggling to balance between our financial needs and having a little fun. Aren’t we? Missing a payment occasionally or carrying some balance at some point is okay. But if this becomes a habit, then you’re clearly wandering onto the financial thin ice.
So, how can you tell when you’re running into financial trouble? Here are the warning signs that clearly indicate that you’re in financial trouble. Don’t ignore these signs and wait for the problems to stack up before taking action. You need to act as soon as possible. Got it?
You have no idea how much money there is in your account
Problem: The problem here is that you just swipe your debit card anywhere and everywhere without keeping a track of how much money you have in your account. Don’t just assume that you have money in your account and spend thoughtlessly. You are never going to achieve your financial goals if you keep wasting money.
Solution: You got to wake up, bro! Check your account balance at least once a week (make it a habit!). Besides checking your balance once a week, you need to study your monthly statements to know where you have been spending all your money. By doing so you’ll be able to get a better grip on your cash flow. Also, we would advise that you stick to paying by cash for a few weeks so that you’ll learn to spend mindfully. Cool?
You depend on your Credit Card way too much
Problem: You’re always tempted to pay with your Credit Card. Whether you are at the supermarket, at the lifestyle store or on the Amazon app, you end up giving your Credit Card details in the billing section. Especially if you have been living paycheck to paycheck, you’re just racking up debt by using your Credit Card for all your purchases.
Solution: One of the best ways to cut your expenditure is to set a monthly budget. Setting a budget is not enough, you’ve got to stick to it also. With a budget in place, you’ll be able to cut down on the unnecessary expenses. In addition to this, you should leave your Credit Card at home when you go shopping. It is okay to use your card for large purchases where you have the option to convert the payment to EMIs. However, for your basic expenses, it is better that you stick to cash payments.
Additional Reading: 5 Bad Credit Card Habits You Need To Change Right Now
You don’t check your bills and account statements
Problem: Your bills and account statements are usually lost in the pile of unopened envelopes or unread emails (if you’ve gone paperless). You also usually avoid the calls from lenders (thanks to the Truecaller app!). Basically, the problem is that you are drowning yourself in debt.
Solution: Stop avoiding the emails and the calls. Instead, talk to your lender and explain your current financial situation. Most lenders are willing to work out a payment plan according to your situation. So, stop avoiding your lenders.
You keep adding more debt
Problem: You are already in debt and then you keep adding more. Really? What’s the logic there? Sorry, we forgot that logic isn’t your thing! If you keep justifying your bad habits, you’re going to land in a financial mess. Instead of approaching the problem and solving it, you are adding to it.
Solution: It takes a lot of practice to get rid of your impulse-spending habit. One way to cut down on the unnecessary expenditure is to lock away your Credit Cards. If you’re an avid online shopper, then you need to delete all your payment information that’s stored on these sites or apps as soon as possible. Another way is to stop yourself from unnecessary expenditure is to call up your buddy and ask him or her to save you from making the purchase.
Additional Reading: How To Repay Your Debts Using The Snowball Method
You justify your bad financial habits as a one-time thing
Problem: Have you ever dipped into your savings to buy yourself a fancy watch? Have you ever taken a cash advance on your Credit Card to pay for a party? Well, you have just committed a financial crime. And the obvious justification you would have given yourself is that it is a one-time thing, right? How many times have you done such things? Was it really a one-time thing? No, right? Well, there’s your problem, buddy! You are basically piling up unnecessary debt.
Solution: The only solution here is YOU. You need to understand that what you are doing is wrong. You are being a victim of poor financial decisions.
You are using one financial tool to clear the debts of another
Problem: You use your second Credit Card to clear the debts of your first one. Or you use your Credit Card to pay for your Car Loan or Home Loan. You are often tempted by balance transfer offers. But have you ever taken a minute and thought about how good this practice is? You are basically abusing your Credit Card and can cost you a lot of money in the end.
Solution: Organisation is the key. Plan your debt payment in such a way that you pay the full amount and on time every month. This will save you a lot of the interest money and you wouldn’t have to depend on balance transfers also. If you are looking for a way to clear your Credit Card debts, then you could try taking a Personal Loan for the same. The interest rates are lower than that on your card.
You often borrow money from your friends and family
Problem: Do you often find yourself mooching from a family member or a friend? Well, it’s a sign that you’re either already in a financial mess or you’re trying to make a purchase that you can’t afford. And if you keep asking your parents or your friends for money, you are never going to achieve financial independence, ever.
Solution: It’s good to have a partner to help you stay on track financially. So, instead of borrowing money from your folks and friends, enrol them in your financial plan and seek their guidance to improve your finances. Social support is the best help you can get to stop yourself from overspending and save better.
If you notice any of the above signs, then you’re sinking financially. It’s a red flag and you need to start acting now. Ignoring these signs could land you in deep trouble. Act before that happens. Okay? Good luck!