15 Signs of Approaching Financial Troubles

It seems our human nature believes it understands other people’s problems clearly and with certainty, even though we often fail to recognize our own challenges. Finances present us with a similar dilemma. We all too often struggle to recognize signs of pending financial difficulties even when family members and close friends around us might think them so obvious that they don’t even bring them up in conversation.

What are the most common signs of future personal finance troubles?

Signs of a potential personal finance crisis include problems with saving money, carrying balances on credit cards, using risky financial services, borrowing from family or friends, taking extra work to pay regular bills, and an inability to identify the amount of one’s debt.

If you recognize one or more of the following situations and behaviors in your own financial life, take it as a wake-up call that demands your most urgent attention. Some may seem simply concerned while others should obviously raise an alarm. In combination, they can all lead to trouble.

1. You don’t save any money, month after month.

2. You make only the minimum payments on all of your loans, including mortgage, auto, and credit cards.

3. You have used a high-risk, high-fee, and high-interest lender in the past 12 months, such as payday loans, car title loans, pawn loans, or tax refund anticipation loans.

4. You have purchased, or are considering purchasing, anything from a rent-to-own business.

5. You can’t guess your current credit card balance(s).

6. You don’t know what your credit card limit is.

7. You borrow from family or friends to cover the costs of your basic expenses.

8. You receive assistance from family or friends but pay for cable TV.

9. You work overtime to cover the costs of basic living expenses.

10. You have used a credit card cash advance in the past 12 months.

11. Twenty percent (20%) or more of your take-home pay goes to making minimum payments on your debt (excluding your primary mortgage).

12. You delay healthcare visits, treatments, and prescriptions because of your financial situation.

13. You have a car payment that equates to more than 10% of your monthly income.

14. You have asked your employer for a paycheck advance in the past year.

15. You can’t sleep because you worry about your finances.

These are not the only signs of financial trouble. Every personal and household financial situation differs, so you are the one best prepared to identify possible trouble. These signs typically lead to problems such as accounts going to collections, additional financial stress and worry, missed payments with late fees, and high-interest rates (meaning higher overall payments).

Basic Financial Troubles

Each of the 15 signs above can fall into the following financial categories:

• Misplaced Financial Priorities

• Overspending and Living Beyond Your Means

• Inappropriate Usage of Credit

• Poor Borrowing Decisions

The answer to these problems is not merely to earn or make more money. Additional income may or may not help. Human nature is such that the more money you make, the more you will spend. Unless you have made a commitment to improving your finances, created a plan to change, and then follow that plan, no amount of additional income will solve your troubles.

Minimizing Future Financial Problems

Consequently, if you recognize one or more of the above signs in your personal or household finances, stop worrying or stressing about it and choose one or more of the steps below to get started on your commitment and plan for improvement. Above all, understand that there is absolutely no reason for you to spend $50 or $100 or $200 to attend a personal finance event where some author or talk show radio host and his or her disciples try to upsell you additional programs and materials.

1. You are your first and most important resource. Spend time working on your finances. Millionaires spend an average of four hours every week working on their household budget, what to do with income, how to control their spending, and how to increase their investments. Most started such habits BEFORE they acquired their wealth, not after. They are financially successful BECAUSE they were already in the habit of regularly paying attention to their money. If you are not sure where to start, visit your local library and look for help using keywords and phrases such as budgeting, household finances, everyday money, and credit building.

2. Do not be afraid to ask for help. You will find that those who are successful with their own finances are more often than not very willing to share some time with you. Don’t ask the neighbor with the brand new $100k car in their driveway. He or she likely lives paycheck-to-paycheck like nearly 8 out of 10 American workers, regardless of income. Instead, find a friend, neighbor, or fellow parishioner who owns a successful small business, and lives in a nice but modest home, and ask him or her about financial habits, tools, and behaviors that might help in your circumstances.

3. Find a local nonprofit credit counseling organization that provides free financial management classes. Start with members of FCAA (such as Money Fit by DRS) or NFCC. Such agencies may offer free regular workshops in person or free webinars 24/7. If you are married, take the courses together to become financial teammates rather than adversaries.

4. Contact a member of your state’s Jump$tart Coalition for Personal Financial Literacy and ask about any classes or mentors that they may have available. Many banks and credit unions belong to this nonprofit coalition focusing on promoting healthy personal and household financial habits and behaviors. Some Coalitions work exclusively at the elementary, middle, and high school levels. Others work with all adults.

5. Your local county extension office often has a personal finance specialist who may offer free counseling, free workshops, and free tools and materials. County extension specialists have often earned a bachelor’s, master’s, or even a doctorate degree and base their approaches and solutions on proven research.

With so many highly qualified, top-quality, and free resources to help you address, minimize, and even avoid financial troubles, the only question left is when you will start. Identify your most concerning issue from the list of 15 above, then commit to contacting today one of the 5 free resources to start your path to greater financial stability and success.

Related Questions

How can you tell if someone is struggling financially?

Friends or family members headed for financial crises often mention their difficulty in saving money, exhibit a pattern of declined credit or debit card purchases, take out payday loans, shop rent-to-own stores, consider taking on a side job, or avoid going to the doctor to minimize medical bills.

How can you help someone with a lot of debt?

To help someone struggling with debt, educate yourself briefly on the basic debt elimination options, express a sincere concern from a supportive perspective, help the individual identify a realistic future without debt, and offer support and accountability.