Signs You Are Heading To Financial Catastrophe

When doing well financially, it is usually apparent to us. Yet when you happen to be making bad financial decisions, it can sometimes be tricky to tell that you are going down a dangerous road. Knowing some main warning signs and identifying them will be essential to avoiding a catastrophe.

Paying Late Fees

When you start missing your fees, one of the first giveaway signs is that you are heading down a dangerous financial path. This can include your mortgage, rent, utility, credit card, and other subscription fees. Although some months may be busier than others, missing fee payments is serious. You definitely will not get off as quickly for your more severe expenses, such as your mortgage and rent. You can have a foreclosure and lose your home very quickly due to missing mortgage and rent payments. Credit card fees will undoubtedly taint your credit history. This will lower your score, yet it can affect your chance of getting future loans or financial help from the bank.

Your Savings Keep Getting Lower

An evident sign to look out for is if you have been using your savings. Of course, everyone has different circumstances, and some people may require to use their savings for important reasons. These can include school tuition, medical costs, or a down payment. These reasons are entirely different since these are valid reasons to use your savings. Yet if you notice that you are using your savings for shopping sprees, brand new vehicles, and paying off your high credit card amounts, you should be concerned. Although this may seem harmless, it can lead to a bad spending habit and ultimately dry out all your savings.

Using Retirement Savings

Like the previous point, using retirement savings is a significant sign of worry. Although using your savings once in a while is necessary, there should be no reason to use your retirement savings unless there is a vital emergency. If you use your retirement savings for everyday costs and lifestyles, this will affect your later years in life. There have been cases where people have done this and the outcome was quite negative. It may seem convenient in the present, yet once you retire, you unfortunately won’t have enough to live comfortably during your older years.

You Have No Budget

Having a budget is the perfect way to regulate your income and expenses. A budget plan can alleviate financial stress and worry about monthly bills. However, having no budget in your life will lead to a much larger chance of heading down a poor financial path. The chance of being in bad debt and having a low credit score is exceptionally high.

Borrowing Loans

This point may be broad since we all borrow a loan at some point or another. This can be for a vehicle, a mortgage, or education. Yet getting loans for high expenses or purchases will lead to a major financial catastrophe. The more loans you get or, the higher the loan you get, the more interest there will be. So not only will you need to repay these loans, but there will also be a large amount of interest. These loans will also show up on your credit history and inform lenders and banks that you have needed a decent amount of financial assistance.

It can be challenging to identify when heading down a dangerous financial path. Yet, when you look for significant signs and get help, you can avoid an enormous catastrophe.

Sources

-Solve Your Debts (2019). 11 Signs You’re in Financial Trouble. Retrieved from https://www.solveyourdebts.com/blog/11-signs-you-are-in-financial-trouble/