It’s common that we put our heads in the sand so that we avoid facing reality of situations. You may be having great time with all fun and fancy lifestyle, but what you may not know is that you could end up in a disaster in finances. When you think about the money you make, the type of car you drive, and the great things you have, you may believe that everything is on track. Many people seem to be earning good income but their finances are fast tracking to disaster. It has happened even to financially successful people hence you should not think that it cannot happen to you. The good thing is that you can see the red flags for an impending financial disaster and take an about-turn to save yourself. Watch out for these warning signs of a financial disaster.
Your savings account reads zero balance
Your savings account offers you short term financial security. When it reads zero balance, you have no cash that can take you a couple of months if you had difficulties with your cash flow or job. The situation is even worse if you have not established cushioning cash for emergencies. When you detect that your account has been reading zero balance for a couple of months, know that a disaster is knocking your door.
Cannot make minimum credit card payment
Your credit card debt can pose trouble when you cannot put it under control. Credit card interest rates on balances can escalate when you fail to make the minimum payment. Even when you are only making a minimum payment, you may not be on the safe side. You should be able to repay the full balance every month and not rolling over the balance.
You have incurred multiple overdraft fees in one year
It is acceptable and normal to have occasional slip-ups that allow you to get overdrafts. However, when you find that you are running for overdrafts every time you need emergency cash, you may be headed for troubles. Overdrafts fees may be plunging you into more debt. When you are in this situation, it clearly indicates you are spending on the edge. Your paycheck cannot support the expenses.
You borrow from your credit card to pay debts
The convenience of paying with credit card should only be kept within the limits. When you are tapping on the credit card loan, you are then mounting your debt. You will end up paying hundreds of dollars in interest, something that you could have avoided. This should give you a warning that things are not working out well for you in regard to your finances.
When it comes to managing your finances, you need to know that living beyond your means, having a bad credit profile, and incurring high debts are a recipe for an impending financial disaster. Start re-evaluating your spending patterns and look at these signs so that you make adjustments before you plunge into a deep financial pit. You can gain control of your finances and begin to build your financial stability.