Warning signs of financial trouble

Despite the fact that most people make a substantial amount of money, they still find themselves living paycheck to paycheck, which eventually lands them in financial trouble. Why you might ask? Well, it is because a large number of people have really poor financial habits. However, financial troubles don’t just spring up from nowhere – there are always warning signs. However, most people tend to ignore these warning signs until they blow up in their faces. In this article, we will be discussing these financial trouble warning signs extensively. Let’s get right to it, shall we?

If you have zero or no significant savings,

When you have no savings or your emergency fund is below the $2000 that is recommended, you should start paying attention as this is a gamble that will cause you a lot of trouble. Regardless of what you earn, having a savings account is very important. You can put your emergency fund in your savings account or have a separate one for that – the decision is yours. The most important thing is to have significant savings or an emergency fund that can fund unexpected events like an accident, loss of job, medical bills, and others.

You tend to avoid your bills.

There’s nothing worse than having a stack of unopened mail in your home or a number of unread emails in your inbox (if you are going the paperless route). When you see yourself doing this, it should be the first red flag of upcoming financial distress. Rather than avoiding your bills, you need to call the people you owe and explain your situation to them. Most companies will be more open to discussing it with you when you are upfront, and they might even offer you a payment plan.

Can You Borrow to Pay Off Other Loans?

When you start borrowing at ridiculously high-interest rates to pay off your other loans, you are in real financial distress. This system, for one, is not sustainable, and you’ll be riddled with even more debt than before. The best thing to do is to reevaluate your finances and figure out the best way to change your financial situation.

You Continue to Incur More Debt on Your Credit Cards.

Most people use the rationale that since they already owe so much, adding to their debt isn’t such a big deal. This is very false and it will cost you a whole lot in terms of your credit score and report. Credit cards are very tempting, so if you see that you have incurred a lot of debt, it is time to resign those cards and figure out ways to pay back your debts.

When you have been denied credit,

A major warning sign that shows you are in financial trouble is when credit is denied to you. Credit providers make use of your credit score and history when giving out loans, so if they deny you credit, that means that there’s something wrong with either your credit score or your credit history. This means that you have to pay close attention to these things and work toward getting your credit score back to a good level again.