Many people that are finding themselves in dire financial situations could have avoided the problems if they had paid attention to the warning signs that signaled that they were on the path to financial destruction. These warning signs are easy to spot once you know what they are and taking action to correct your financial situation as soon as these signs occur can save you from a lot of future pain and heartache. Here are some of the warning signs that signal a financial disaster in your future.
You Have No Savings
Having no savings is a sure sign that you will be experiencing a financial disaster in your future. Savings are needed to protect you from having to use costly credit when facing unexpected expenses, like high medical bills from an illness or injury, car breakdown, or having to replace something in your home. If you are living paycheck to paycheck, it will be difficult to pay off emergency purchases put onto a credit card once interest charges are added. This could result in paying hundreds of additional dollars in interest payments, paying for years to pay off the charges, and a huge hit to your credit score if you are ever unable to pay the minimum amount required by the credit card issuer. You should aim to have enough money saved to cover at least three months worth of your normal expenses.
You Keep Missing Payments
Missing payments on a regular basis is another sign that you may be facing a financial disaster soon. Every time a payment is late for one of your accounts, you are taking a hit to your credit score and incurring late charges that could really add up over time. You should aim to pay each one of your bills as soon as you receive it so that there is no chance of it being paid late or the payment being missed due to forgetfulness. If you regularly have to wait for another paycheck to pay your bills, then your budget is too tight and you need to find ways to reduce spending or increase income before you get into real financial trouble.
You’re Tapping Your Retirement Accounts
The money that you have saved for retirement is supposed to be used to secure your comfort during your retirement years. If you are tapping your retirement account to pay for your day-to-day expenses, something has gone very wrong. Removing money from your retirement account is one of the worst financial mistakes you can make, so before this becomes your only option, you should take a hard look at your situation, cut your expenses, and modify your budget to prevent this from occurring again in the future.