When it comes to personal finance, usually, people are surprised when the stuff hits the fan. This may be surprising to many outside observers, but people truly are taken by surprise when it seems their financial house of cards come crashing down. To an outside observer, the signs are everywhere. And they are quite puzzled why people who eventually find themselves hitting a financial wall and experiencing a budgetary crunch express so much surprise when bad things happen.
If you dont want to be caught in a surprise and you dont want to find out the hard way that you are handling your personal finances the wrong way, pay attention to the top four signs outlined below. Here are the top four signs you are headed for a personal financial crash:
Sign #1: You are having a tough time paying for housing
Whether you are renting or you are paying down a mortgage, one of the biggest signs that you are possibly going to face a financial meltdown in the future is when you have a tough time paying for housing. If you think about it, housing is your most fundamental and basic expense. For the middle class in the United States and many other countries, housing is the biggest expense; more expensive than food, paying off student loans, and other long term liabilities. When it comes to the share of your personal income, most of the pie is taken up by the amount of money you pay to keep a roof over your head.
If you are having a tough time paying for rent or covering the mortgage, this is a big red sign that you need to check your personal finances, cut down on expenses, exercise a little bit more self-discipline, and take drastic steps. Or else, you might hit the wall eventually, and either get evicted or get foreclosed on by the bank. You dont want this to happen.
Sign #2: You’ve stopped filling up your gas tank
One of the most easily visible signs that everything isnt on the up and up with your personal finances is when you have to pay for gas in increments of five dollars, ten dollars, or twenty dollars. Usually, people fill up their gas tank and wait for it to get near empty, and fill it up again. Obviously, if you can only pay for gas in small amounts, this is a sign that there are several pressures on your income and you might not be able to make ends meet.
This is a good sign to start looking for extra income by doing projects online, working from home, or working hard at your current job to get a pay raise or a promotion.
Sign #3: You find yourself borrowing from friends often
Usually, when people borrow from their friends, its usually in the case of covering food when friends eat out or asking for your friends to cover you when you go watch a movie. Not only is this embarrassing, but it can also be a red flag regarding the state of your personal finances.
If you see yourself borrowing from friends quite often, you need to sit down and thoroughly analyze where your money is going. You might need to cut back on certain things or look to increasing your income because if things persist, you might hit a financial wall.
Sign #4: You only pay your credit cards minimum amount
This is a classic sign of fiscal mismanagement. The whole point behind credit cards is to give you emergency funding while you still don’t have the money to cover emergencies or to buy something outright. Your credit card is not supposed to be an income extender. Unfortunately, many people look at credit cards as a free source of money. That is hardly the case. Your credit card can actually be your ticket to a one-way trip to financial ruin.
But no matter what financial hardship you are experiencing right now, always remember that there is always a way to get out of it. You just need to have a positive outlook in life. Richard Kimball, HExL, Inc. founder and CEO said it best: ” Don’t let the momentum of a certain situation carry you into a bad decision. Be prepared to make midcourse corrections even if that is disruptive and unpopular.”