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10 Red Flags That May Signal You're In Financial Trouble
In the personal finance world, people routinely ignore red flags that suggest their financial situation is unstable and susceptible to collapse.
Even so, you should always be on the lookout for the following red flags that often signal your finances are in disarray, here the 10 red flags that may signal you are in BIG financial problems:
1. You have revolving balances on your credit cards. Folks who fail to pay off their credit card bills in full each month, by definition, are in violation of one of the ten commandments of personal finance. That is, they spend more than they earn. As a result they’re more susceptible to defaulting on their obligations down the road.
2. You rely on payday loans to cover your bills each month. This is one of the worst examples of living beyond your means.
3. You’ve been turned down for a consolidation loan. This is a sure sign you are already over-extended and that your debt-to-income ratio is too high.
4. You’re hiding your spending behavior from family members. This red flag indicates that you are aware of your personal finance problems, but are unable to acknowledge it. Fighting with your spouse is a related indicator as financial troubles often lead to domestic trouble.
5. You finance your vehicle for more than five years. This is a clear sign that you’re buying more vehicle than you can reasonably afford. Try this instead!
6. You get more than one late notice per year. On occasion, everybody may let a bill fall through the cracks and forget to pay it. But if you find yourself getting multiple late notices for bills, especially for utilities, then that’s a signal that your finances may be in serious trouble.
7. You get more than one bounced check per year. Again, most folks have had an occasional overdraft of their checking account. But if this happens more than once per year, it’s usually a sign of trouble.
8. You need a co-signer to get a loan. Those without a credit history can ignore this warning sign. However, for everyone else, the need for a co-signer indicates that banks no longer find you credit worthy.
9. You find yourself borrowing from your family and friends. I know. Borrowing from friends or family is a surefire way to sow the seeds of discontent — especially when you fail to pay the money back.
10. You lack an emergency savings account of at least three months living expenses. Those who are living from paycheck to paycheck can be completely derailed by even the most modest unexpected expenses, such as the need for major car repairs. Beware of this!
So there you have it. If you find yourself participating in two or more of these practices, then you better get your financial house in order. Pronto.