In a world powered by money, it’s crucial for us to have a healthy relationship with our funds. Money doesn’t just buy us food and give us shelter; it offers a peace of mind that we’re safe from the next unexpected event life throws at us.
Few people would argue against this sentiment. At the same time, it’s common to live beyond our means in America. Many of us do it without consciously realizing. It’s called denial, and it’s a central reason why so many people are in financial turmoil.
Pull the wool from your eyes with these signs of impending financial trouble.
You Pay the Minimum Balance on Your Card
Do you carry a revolving balance on your credit card? If so, how much do you pay monthly on your balance? If you’re like many Americans, then you probably just pay the minimum.
Creditors make it easy to do so, listing the minimum repayment amount in bold letters at the top of the bill next to the due date. The issue here is that credit cards have average monthly interest rates of 14 percent (for existing accounts) and nearly 20 percent for new offers. Paying the minimum might ease your financial stress in the short term, but it’s only getting you further behind over the long haul.
You Spend More Than You Earn
To live financially responsible lives and build wealth, we need to master a simple equation: spend less than we earn. Otherwise, our ship is taking in water. Of course, every once in a while, something will come up that gives us a net loss for the month (such as a vacation or major car repair). But if your charges outweigh your income each month, you’re either burning your savings, racking up debt—or both.
You Use Credit Because You Don’t Have Enough Money
Despite their negative reputations, credit cards can be effective financial tools. Today’s credit cards can save money via welcome bonuses and rewards points. They can also offer purchase protection, travel insurance and other perks. But credit cards are only useful tools when they’re used responsibly. Using credit in place of insufficient funds is to walk a narrow, dangerous path.
Your Credit Cards Are Nearly at Their Limit
When we are approved for a credit card, we also get a charge limit. This may be frustrating for people looking to make big-ticket purchases, but these limits are for our own good. If your credit accounts are nearing their limit, your credit score will suffer, in addition to your purchasing ability. But more importantly, it’s a sign that you’re spending too much.
You Pay Off Debt with Loans or Cash Advances
Personal loans and zero-interest balance transfers can help someone get out of debt if they have a plan to do so. However, without a plan, all you’re doing is moving money around. Worse, if you’re taking out cash advances and payday loans to get creditors off your back, then you really have a problem. These types of loans carry even higher interest rates than credit cards. You’re much better off asking friends or family for help if you need money.
Creditors and Collectors Are Calling You
Do creditors and debt collectors call you often? Is your mailbox filled with late payment notices? Having outstanding balances is stressful, but it’ll only get worse through inaction. The best thing you can do at this point is either declare bankruptcy or undergo debt settlement. Many people don’t know the latter is available to them. Even co-founder and CEO of Freedom Debt Relief, Andrew Housser, didn’t realize how effective debt settlement was until he heard how it helped a friend. Through negotiation, Housser’s friend managed to reduce a $30,000 balance to $9,000. As Housser tells Inspirery in an interview, it’s this anecdote that led him to start his debt settlement firm.
You Don’t Know How Much Debt You Have
Life is complicated. We don’t always know where we stand with various personal details. But if we owe money to people or institutions, we should probably know how much. If you don’t know how much debt you have, how can you put together a plan to get out of it?
You Stress Over When Your Next Paycheck Is Coming
Barely making ends meet and living paycheck to paycheck is a harsh reality for many Americans. Depending on your financial responsibilities and income, you may not be able to change your situation quickly. What you can do is lay out a plan to use the money you do make as efficiently as possible. This means allocating more money to your debt and investing in yourself to earn more income through a side hustle or career move.
Some of these signs are more troublesome than others, but they all boil down to a lack of financial control. It’s difficult admitting we’ve lost the reins, but it’s the only way to correct course. Consider how relevant these eight signs are to your situation as you look to improve your economic standing. Then, do something about it!