One of the common threads through nearly every financial disaster is that the people affected never saw the disaster coming. In every case, there are signs that the financial situation was spiraling out of control but the individual did not know how to interpret the signs so that they could see how bad the situation was getting and take the steps needed to correct the problem. Here are some early warning signals that financial disaster may occur soon.
Surprising Bank Or Credit Card Statements
If you open a statement from your bank or credit card issuer and you are unpleasantly surprised at the numbers that you see, chances are a financial disaster is looming in the distance. One of the biggest factors in many debt disasters is that the person overspent with their credit cards or spent the majority of their savings without realizing it, typically in many small transactions instead of one or two large purchases. If your bank balance is lower than you think it should be or your credit card balance is higher, you may want to restrict your spending to purely necessary items until you can fix those balances.
No Savings At Hand
People that have little or no savings at hand find that their options are extremely limited when a financial issue occurs and all of those options are going to be expensive. Without savings, a small financial problem turns into a large issue as the person is forced to use high interest credit, such as a credit card charge or payday loan, or neglect the issue until more funds are available, which could exacerbate the problem. It is important to have savings available and easily accessible so that you are not caught short when an emergency occurs.
Living Paycheck To Paycheck
If the money from your paycheck is just enough to pay for your fixed expenses and you have little or no discretionary income, then you are definitely headed for a financial disaster if nothing is changed. People that live paycheck to paycheck have no room to maneuver if something should change in their financial situation, such as an unexpected expense or a cut in their income. If you find that you are spending all of your money before it is made, you need to sit down and take a serious look at your finances to find out were spending can be cut before you reach financial devastation.
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