Money Management: Ten Warning Signs of Financial Trouble

By The Credit Counseling Foundation at GoDebtFree.com

1. Do you make only minimum payments on your credit cards and other revolving accounts?

The best advice, of course, would be to pay off your credit cards and revolving charges in full every month. Since this is not possible for most people, it is highly recommended to pay more than the minimum, if you can afford to do so. If minimum payments or paying slightly more are all you can afford, this is probably an indication that you are overextended and should analyze your budget and make lifestyle adjustments. Any unforeseen expense will throw your finances into disarray.

2. Have you been declined credit or a credit line increase?

Being declined for credit is a sure sign that you need to examine your finances. In making credit decisions, creditors use information obtained from the various credit bureaus to determine your credit worthiness based on what is known as a FICO or Beacon Score. Therefore, if they decline you, it means that they feel that your finances are either stretched to the limit or beyond.

3. Do you have a savings account or find yourself exhausting your savings to support your lifestyle?

If you are not able to set aside savings on a consistent weekly or monthly basis there is cause for concern because you may not be able to meet any unexpected situation that requires additional financial resources. If you are exhausting savings to keep up with your lifestyle, its a sure fire sign that you are living beyond your means. A budget reassessment is definitely needed.

4. Do your credit card bills run approximately the same each month?

This may be a sign that you are living off your credit cards to maintain your lifestyle or to pay for day to day living expenses. Its time to examine your budget!

5. Are your cards nearing or over your credit limit or have you ever had a credit card purchase declined?

If you answered yes, this is a good sign that you are stretched to the limit or already overextended. Many are still in denial at this point. This is the time to get a good grasp on your finances and work out a game plan to prevent further damage. If you were more aware of your finances and realized how high your balances were, you might have been able to avoid the situation. Your creditors set your credit limit based on your credit history, income and outstanding debt. If you are at or near this limit it is a good sign that trouble awaits you if some hard financial decisions are not made.

6. Do you run up unaccountable credit card debt each month or avoid totaling up the amount of your outstanding debt?

If you can not account for the total amount of debt that you owe, you may be avoiding the problem. Simply hiding your head in the sand will not make the problem go away, it will only get worse! You must immediately reassess your spending patterns. Face up to paying off your debt in a more efficient manner, even if it means doing without that coffee and donut you buy every morning on the way to work. If you do not, you area inviting catastrophe

7. Are you relying on cash advances to pay your other bills?

Danger!!!! You are simply robbing Peter to pay Paul and you are committing financial suicide! Your income can not support your style of life. An immediate budget analysis is necessary and professional help may be extremely useful.

8. Is your debt so out of control or are you so ashamed of your debt that you keep it from family members?

Hiding debt from family members is a clear sign that you are in denial. The fact that you feel you have to hide your spending behavior from loved ones indicates that you refuse to acknowledge there is a problem. If you still cannot share the problem with your loved one, seek professional help on your own. The time to act is now.

9. Are you living pay check to pay check?

Do you issue checks and then keep your fingers crossed in hopes that by the time the check is cashed, you will have sufficient money in the account to cover the check. Issuing checks on the hope they will clear or, even worse, bouncing checks is a red light that you are in serious financial trouble.

10. Are creditors calling you?

Receiving calls from creditors is a sure sign of trouble. Ducking these calls will not make the problem go away. Since most creditors are unwilling to make direct concessions the use of a trained professional such as a credit counseling service might be the only way to gain control of the situation and become current again.

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Copyright © 2003 The Credit Counseling Foundation.

This article reprinted with permission. For more information or for financial help visit The Credit Counseling Foundation at GoDebtFree.com.