4 Signs You Could Be Headed for Financial Problems
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It seems to me that much of the reason many people are in so much personal financial hot water these days is that they don’t understand the warning signs that indicate they could be headed for financial problems. For years Rick and I would tell ourselves that we were fine financially. After all, we could easily make our payments, everyone has debt, our income will only go up, blah, blah, blah.
It was only in the years after Rick’s layoff and him taking a lower-paying job that we learned there were plenty of red flags waving in our midst, trying to tell us that we were walking on thin financial ice. Today I’m sharing four of the most prominent signs that might signify to you that you could be headed for financial problems, hoping to help others avoid ending up with the financial problems we found ourselves facing in 2012 and are now digging ourselves out of.
You Don’t Know Your True Financial Picture
Before our money wake-up call, we had very little idea of our overall financial picture. Honestly, we didn’t want to know. We didn’t want to have to look in the mirror and face up to our overspending, our lack of savings, and our growing debt load. It was easier just to stick our heads in the sand and keep on making those minimum payments, so that is what we did.
If you aren’t currently aware of your true and overall financial picture, make sure it’s not because things are heading for a major money breakdown, and then make a commitment to educate yourself about your current financial problems, which may include your debt load, savings amounts, retirement amounts and the like.
You’re Overconfident with Your Current Financial Situation
We made this major league money mistake as well. We just figured that because we were comfortably making our minimum payments, we were doing fine (i.e. we had no major financial problems). We often compared ourselves to others, as in, “We’ve got WAY less debt than so-and-so.” “So-and-so spends WAY more money than we do.” We had convinced ourselves that the mess we were sitting in really wasn’t that bad, so therefore we could keep being irresponsible with our money.
If you are feeling more confident than you should about your major debt load or lack of savings, it’s time to face the facts, my friend. You deserve to know the truth about your current money situation.
You Don’t Have Monetary Goals
A lack of having a goal ensures you’ll miss it every time. If you don’t have a set purpose for every dollar that comes into your pocket, you’re much more likely to blow it on stupid, useless stuff. Without a purpose for your money, you’re setting yourself up for financial failure every time, because a lack of purpose for money often breeds a lack of respect for it. Take some time to write down what your monetary goals are, and give your money a purpose.
You Don’t Have the Right Attitude About Financial Problems
This was another area in which we failed miserably in our finances. We mistakenly believed that if a major financial problem like a financial emergency came along, we’d figure out a plan at that time. Then, when the emergency came in the form of Rick’s layoff, we muddled through just fine as we scrambled to sell things, etc. However, when he took his new job at 80% of his previous pay, we blew that off as a financial non-emergency. We just “wisely” figured we’d put everything over and above what we could pay for onto credit cards until his pay caught up to his previous income. We didn’t view this 20% drop in income as a financial emergency. Clearly, though, we should have, as we were conveniently living paycheck-to-paycheck on his old salary.
I’m a big proponent of a positive attitude, but sometimes a positive attitude is a cover-up for not facing the facts, and that can lead to serious financial problems. Make sure your “we’ll be just fine” attitude isn’t misaligned with the truth about the financial emergency you’re facing, or could be facing at any time. Make a plan today that will help you to be financially prepared for things such as job losses or unexpected major expenses.
If after reading this article, you have found yourself falling prey to any of the above financial warning signs, give yourself a big kudos for recognizing that fact. Then, put a plan in place today to turn your financial picture around and conquer those warning signs, turning them from problems into victories.
What other warning signs can you think of or have you seen in a person’s life that might indicate they’re headed for financial problems?
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