Everyone goes through tough times, but rarely does financial disaster come out of the blue. Instead, there are often little signs that we’re headed down a dangerous path and could end up in a serious financial situation such as foreclosure or even bankrup
Everyone goes through tough times, but rarely does financial disaster come out of the blue. Instead, there are often little signs that we’re headed down a dangerous path and could end up in a serious financial situation such as foreclosure or even bankruptcy, down the road.
Friends, the best time to seek the help of a financial counselor at a nonprofit homeownership organization is not when you’re getting ready to lose your home or when you are six months behind on your rent (though a counselor can help you in that situation too). Instead, here are 4 signs that you’re headed in the wrong direction and you need to stop and seek financial counseling immediately.
You’re using credit to pay for day-to-day expenses. It’s one thing to use a credit card to pay for an emergency car repair if you don’t have the money, but if you’re pulling out your credit card to buy groceries and pay for gas because you don’t have any cash on hand, you’re playing a very dangerous game. Not only could you end up paying interest on food that was eaten up weeks ago, but you are living above your means if you aren’t setting something aside each month in a savings account.
You’re paying the minimum on your credit cards. Credit card issuers don’t mind if you make minimum payments on your credit cards because that means you’ll take longer to pay off the debt. That’s good news for them, but bad news for you since you can end up spending thousands of dollars more in interest and paying on that bill for the next 30 years! If you don’t believe me, look closely at your next credit card bill. By law, card issuers must tell you on each statement how long it will take you to pay the debt if you make only the minimum payment. If you can’t afford to pay more than the minimum, a financial counselor can help you figure out a plan to get those bills under control.
You need more credit because you’ve maxed out the credit you already have. If you can’t manage the money you already have, do you think you’d be a better manager of more? Most likely the answer is ‘no.’ If you get a new credit card, you’ll probably max that one out too. When you max out your credit cards, not only are you sticking yourself with higher interest payments but you’re hurting your ability to borrow money in the future because high balances lower your credit score.
You’re unable to make necessary repairs on your home. If you’re a homeowner, one sign that you may be in over your head is if you can’t afford to make necessary repairs or improvements. I’m not talking about buying new furniture or remodeling your kitchen. Rather, I mean emergency repairs such as fixing a leaky toilet or replacing a damaged roof. Maintenance is key to protecting your investment in your home. If you’re putting off making repairs or you can’t imagine what you’ll do if the furnace breaks or the refrigerator must be replaced (because eventually they will), you need a better financial plan.
Too many people wait until they are down and out to see a financial counselor, when counseling can help you avoid financial disaster in the first place. The key to success is information. A financial counselor is waiting to help.