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Financial Warning Signs
 Jun 08, 2004

Do you feel you may be headed for financial trouble? There are several warning signs to evaluate if you are having financial difficulty. This article will review some key financial warning signs to watch for and evaluate before you get into financial ruin.

Unless you have experienced a major natural or medical catastrophe or accident, chances are that your financial problems will come upon you slowly. Typically, financial problems creep up on people as they go through life, making small mistakes. Sometimes, the financial warning signs are there, but they are not recognized until it is too late. Indeed, many people, after years of small troubles and ignorance of the signs, finally realize one day that they are in trouble.

The good news is that there are some financial warning signs that you can refer to. Take an honest look at yourself and ask whether or not you are exhibiting any of the following financial warning signs:

Occasional late or missed payments

Even if you have only missed or been late on one or two payments in the last six months, this could be a sign that things are starting to get dicey for your financial situation. If you are late, habitually trying to wait as long as possible before you have to pay, then this might mean you are having issues. If you actually miss payments on occasion this is even more serious. It is important that you look at your finances immediately if you find yourself putting off a payment because you do not think you have enough money. Make changes now, before things get even more serious.

Do you need overtime to pay the bills?

If you cannot live with your regular hours, it may be a sign that you are having financial troubles. If you constantly work overtime because you must, then there is an issue. This is especially true if you have to get a second job. If you are having trouble making ends meet with just one job, you should look for help. It is important to note that this is different from having a two-income household in which you and your partner each have one job. If one of you has to get two jobs -- or if you are dependent on overtime work to make ends meet -- there is something wrong.

Have you been getting loans regularly from friends and relatives?

Everyone needs help sometimes. If you need a loan or money gift from friends and relatives more than once every couple of years, there is a problem brewing. If you are constantly looking for money in order to help you get through the current budgetary shortfall, this is an indication that you may be in trouble. Likewise, if you have been applying for more loans and credit cards in order to ease your cash flow problems, this is one of the financial warning signs. For the most part, you should be able to meet your regular expenses without turning to friends and family -- and most especially without getting into more debt.

Can you account for your debt?

One of the financial warning signs is not understanding why you have so much debt. This is a serious issue. Do you know where most of your debt comes from? Can you name the purchases? If not, there is a problem, since it means that you are using debt and credit too freely for everyday purchases. Indeed, you should be able to account for your income and expenses as well. You should have an idea of what you are spending money on, even if you are not getting loans to pay for things. If you do not have an awareness of how much money you have, how much you make, and where it is all going, you are at risk for some serious financial problems.

Panic over surprise expenses

If you panic when a surprise expense comes up, this is a very definite financial warning sign. No one likes to have to pay for car repairs. But if the thought of $500 or less in surprise expenses comes up, and you get very anxious, this could be a warning sign. For the most part, there should be enough money to cover $1,000 to $1,500 of surprise expenses in an emergency fund. If you do not have an emergency savings fund, this could be a problem. If you have emptied your savings accounts, and if you never seem to have enough to set aside, that is an indication that serious issues could be afoot. You want to make sure that you are prepared for what comes, you need to have an emergency fund.

Evaluate yourself according to the financial warning signs above. If you think you have a problem, it is vital that you seek help before things get worse.

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