Are you a short distance from financial self-destruction? Here's how to tell -- and the steps to take to turn it around.
Before I headed off to college, my mother gave me a simple nugget of financial wisdom: “It’s not how much you make, but how you spend it.”
That wouldn’t be the last time I ran across that statement. Too bad I chose not to give it much thought until things got out of hand.
Once I landed the first job of my career as an accountant, I thought I knew it all. The dough was rolling in, and I was enjoying the fruits of my labors. But then life started happening, and my income was no longer enough.
When I finally stopped playing the blame game and looked within, I realized I never had it together to begin with. Having a handsome, steady income is one thing, but knowing how to make it work for you is another. Clearly, I’d failed at the latter by forgetting to plan for a rainy day.
If you’re wondering if your finances are spiraling out of control, here are a few warning signs to look for:
1. You’re living paycheck to paycheck
There’s no money in the bank, an unexpected bill has arrived, and you’re anxiously awaiting your next payday to bring the panic attacks to a halt.
2. You shuffle debt around
Simply put, you’re robbing Peter to pay Paul. You continuously find yourself advancing cash from one credit card or loan to pay on another one.
3. You’re unable to save
Each time a paycheck is deposited into your account, the money quickly disappears on outstanding obligations. There’s nothing left to set aside for emergencies or your retirement.
4. Creditors are beginning to call
It’s becoming impossible to keep up with your monthly obligations because your income simply isn’t enough, so you pay what you can and dodge the creditors’ calls until more income rolls around.
5. You’re afraid to check the mail
The collection notices roll in, and the constant reminders each day are disturbing, to say the least. As for the credit card statements, you rip up the explanation of the new charges and how long it will take to pay the card off, so you won’t have to agonize over how high the balance is.