It can be easy to look away and not pay attention to your troubled finances. However, even if “out of sight, out of mind” works for you, your finances will not get better by ignoring them. When you do not stay involved in your finances, you may not only miss when a major financial collapse is imminent, but you will not be prepared for it. One thing that can really help stave off any major financial problems is recognizing when a disaster is about to strike.
Here are the red flags and situations you should be paying attention to that can save you from a financial crisis.
Lack of a savings account – If you are not putting a little money away every month, you will not have a safety net when needed. When an unexpected car expense, medical bill or unforeseen circumstance comes along, you may need to use a credit card or borrow money which is just creating additional problems.
Paying off debt with more debt – Shifting debt from one place to another can be helpful if you are lowering an interest rate. But if you are doing it to stay current on making a payment or because you do not have the funds to cover the payment, your financial troubles may be just beginning.
Paying only the minimum – If you are only paying the least amount you can on bills so you have enough to live on the rest of the month, you are on a slippery slope. While paying only the minimum may be okay for the short term, if you do not have a plan to eliminate debt, you can be hurting financially for many years.
Collection calls – If you are receiving collection calls and wish they would go away, they will only cease when you make a concerted effort to reduce your debt and live within your means. Without addressing your financial problems, the calls will continue to get worse as will your financial situation.
When it comes to financial strain that can lead to collapse, there are usually many warning signs. The situations listed above are just a few of the areas that can signal trouble. If you are in over your head with financial trouble, it may be time to speak to an attorney about the possibility of making a fresh start through bankruptcy.