Sometimes financial warning signs may not be as obvious as you’d expect. Most people would agree that ongoing collection calls, a wage garnishment or pending court action are clear signs of an immediate issue…but many people don’t recognize the more subtle notes of caution that their finances may need a closer look. If you find yourself in any of the following situations or habits, it may be time to re-evaluate your financial standing and seek advice from a qualified professional:
Lacking a budget: Having a clear budget is a huge part of having solid finances. A good budget should have allocations for your costs of living, debt repayment AND savings. Plan out your income and all expenses carefully to help avoid a cycle of reliance on credit. If your income isn’t meeting your budget’s demands and you’re regularly using credit to make up the difference, chances are “the budget factor” (ie. spending even a small amount more than budgeted for each month) will become a more urgent issue over time.
Guessing balances: Not keeping on top of bank account and debt balances can easily lead to bounced payments, a derailed budget or even erroneous charges going unnoticed. It’s important to keep track of accounts and payments being made – this is a good way to gauge progress and know where adjustments should be made.
Not saving: Savings can make a crucial difference when financial emergencies arise. Having credit available as a safety net can be comforting, but isn’t ideal, particular if a disruption in incoming funds becomes long-term. Looking to the future and retirement is another component of savings that tends to be overlooked or put on the back burner – but time can pass faster than our good intentions come to fruition if real changes aren’t made.
Making minimum payments: Don’t get us wrong – making your regular minimum monthly payments on debts IS a good thing. The real issues to consider are: Are you only making the minimum payments because that’s all you can afford to make? At that rate of repayment how long will it take to become debt-free? Those minimum payments may keep the account up to date, but in the long run may mean years and years of debt repayment because of the continued interest charges. If you can, always pay more than the minimum payment.
Reports have shown that an alarming number of Canadians would have difficulty meeting their debt repayment obligations with even a minimal increase in interest rates. Be proactive about your finances and speak with a Licensed Insolvency Trustee sooner rather than later regarding debts that have become, or are becoming unmanageable. A financial fresh start could be more achievable than you think!