Top Ten Signs You Need a Financial Makeover

Not unlike facing parents after mischievous events or having to pull weeds on the weekend, dealing with financial problems is an unpleasant task. Sticking one’s head in the sand and hoping it will all go away, does not solve the problem. The effects of procrastination only compound the dilemma. Curtail financial devastation by recognizing early warning signals and adopting a proactive approach. Learn the top ten signs you need a financial makeover.

You Avoid Obtaining Health Care

Many people resist medical care for minor aches, pains or illness. Some may view this as an unnecessary expense or a sign of weakness. However, if illness or injury progresses, the situation may affect an individual’s ability to earn a wage, further jeopardizing finances.

Emergency Equals Panic Attack

Everyone hears repeatedly the importance of saving for a rainy day. Ideally, that means accumulating 3 to 12 months worth of wages. Unexpected events can financially devastate individuals and families. Numerous circumstances occur without warning.

Income Reduction

A decrease in work hours or loss of employment inflicts panic, depression and frustration for many already enduring stressful financial situations. Individuals would be wise to devise alternative means of income in preparation for such an event. Even partial sources of extra income help pay bills or contribute to emergency funds.

You Incur Late Fees

When spending exceeds income, bills go unpaid or result in extra fees when received late. An accumulation of late fees affects credit history and may cause lenders to increase interest rates. However, it is important to maintain housing and vehicle costs in order to have a guaranteed place to live and a means to travel to work.

Maintenance Issues

The situation is bound to occur. An appliance breaks down or the car requires fixing. Individuals not having emergency coverage in the form of warranty protection or excess emergency funds may be in dire straits. The loss of an extra television, second or third vehicle or other luxury item may not pose a major sacrifice. Nevertheless, with limited resources, consider having to replace a refrigerator, washer, dryer or other necessary appliance.

You’re Maxed Out and Continue Spending

Once existing cards reach the maximum limit, persons out of a sense of desperation, often open new accounts in an attempt to keep up with bills. This fallible escape method only increases debt with added interest rates and eventual late fees.

You Pay Minimum Monthly Amounts

Interest rates accompany many monthly bills. By paying only the minimum amounts, interest accrues adding to debt. The debt soon snowballs into an unmanageable beast. In the event of any wage disruption, outstanding debt ruins credit histories or lands people in court.

You Squeak by Month to Month

A guaranteed wage is unlikely given the current state of the economy and employment situation. If alterations in the number of work hours or loss of employment pose a risk to monthly expenses, then reevaluation is in order.

You Use Credit Cards to Pay Bills

This is a sure way to deepen the hole of financial debt. Robbing from one source to pay another eventually spirals out of control. Both sources become depleted leaving individuals nowhere else to turn and saddled with more debt.

You Use Retirement Accounts as an Emergency Fund

While these funds provide protection for many experiencing extreme circumstances, this action eliminates future financial security. Once depleted, these accounts may be difficult to rebuild.

How to Fix It

Individuals with recognizable financial problems must evaluate spending habits. Enlisting the assistance of a debt management program or counselor helps illuminate problem areas and possible solutions. Eliminate credit spending and allocate funds into some type of savings account. Even small increments, automatically entered into an account, accumulate in time. Funds automatically deducted prevent the temptation for spending.

Families should research possible areas where household expenses could create savings. Evaluate various cable, phone or gas companies to obtain the best available bargains. Numerous people eliminate conventional phone services by using cell phones. Only implement basic plans or perhaps use prepaid systems. Obtain cash by selling unnecessary or unused items.

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