Despite the fact that many people make a substantial amount of money, they find themselves living paycheck to paycheck, which eventually lands them in financial trouble. Why, you might ask? Well, it is because a large number of people have really poor financial habits. However, financial troubles don’t just spring up from nowhere – there are always warning signs. Many people tend to ignore these warning signs until it blows up in their faces. In this article, we will be discussing these financial trouble warning signs extensively.
You have zero or no significant savings
When you have no savings or your emergency fund is below the $1000 that is recommended, you should start paying attention as this is a gamble that can cause you a lot of trouble. Regardless of what you earn, having a savings account is very important. You can put your emergency fund in your savings account or have a separate one for that – the decision is yours. The most important thing is to have significant savings or an emergency fund that can fund unexpected events like an accident, loss of a job, medical bills, and others. This fund should be able to support you for six months (ideally).
You tend to avoid your bills
There’s nothing worse than having a stack of unopened mail in your home or a number of unread emails in your inbox (if you are going the paperless route). When you see yourself doing this, it should be the first red flag of upcoming financial distress. Rather than avoiding your bills, you need to call the people you owe and explain your situation to them. Most companies will be more open to discussing with you when you are upfront, and they might even offer you a payment plan.
You borrow to pay off other loans
When you start borrowing at ridiculously high-interest rates to pay off your other loans, you are in real financial distress. This system for one is not sustainable, and you’ll be riddled with even more debt than before. The best thing to do is to reevaluate your finances and figure out the best way to change your financial situation without borrowing from predatory lenders.
You continue to incur more debt on your credit cards
Most people use the rationale that since they already owe so much, adding to their debt isn’t such a big deal. This is very false, and it will cost you a whole lot in terms of credit score and report. Credit cards are very tempting, so if you see that you have incurred a lot of debt, it is time to retire those cards and figure out ways to pay back your debts.
When You Have Been Denied Credit
A major warning sign that shows you are in financial trouble is when credit is being denied to you. Credit providers make use of credit score and history when giving out loans, so if they deny you credit, that means that there’s something wrong with either your credit score or your credit history. This means that you have to pay close attention to these things and work towards getting your credit score to a good level again.
If you are in financial distress, it may feel like there is no way out. This is far from the truth. You just need help from understanding, knowledgeable people. The attorneys at Dsouza and Strachan have your back. Contact Dsouza and Strachan today for a free consultation.