It is often difficult to be objective about our own financial situation. Sometimes things change in our lives and we don’t appreciate the increased demand on our finances. Even joyous events like having a baby or moving into a new house can bring unexpected expenses and strain our budget to the breaking point. Other times, something dramatic occurs – the loss of a job, an accident or a breakup of a relationship – that can send our finances into a spin. For some people, it’s a case where they are trying to live a lifestyle that they simply can’t afford. Whatever the reason, the result is often running up debt that can become overwhelming.
Chances are that if you have opened up this article, you are worried about your finances. How concerned should you be? The list below is set out in escalating order. As you read through the list, you will see the situations becoming more serious. You should never hesitate to seek out professional assistance regarding your finances, but the further down the list you can see yourself, the greater the urgency that you seek help.
Let's break it down into 5 categories:
1) Caution
2) Warning Signs
3) This is Serious
4) Danger Signs
5) Disaster Has Struck
CAUTION
You may feel that your financial life is under control but you may be leaving yourself vulnerable.
Ø While you make your payments every month on your credit cards, you feel you need to have several cards to make your finances work and use them for short term borrowing from time to time (that is, you don’t pay off the total owing at the end of each month).
Ø You don’t have a written budget … you don’t know where you spend your money.
Ø You are trying to save but it is a challenge. You may fool yourself into thinking you are saving … maybe making regular contributions to an RRSP but every few months, you clean it out for an unexpected expense.
If this hits close to home, you need to take stock of your finances, determine where your money is being spent and put a budget together that includes regular savings.
WARNING SIGNS
You are closer to financial trouble than you think. It wouldn’t take much to push you down the path of financial hardships.
Ø Cash is a scarce commodity so you pay almost everything by credit.
Ø Paying off your credit cards in full at the end of the month is a thing of the past.
Ø Managing your money is becoming difficult. You are frequently into the overdraft on your bank account and the cheques you write don’t always clear.
Ø You find it impossible to put money together for things you would like to do … vacations, home improvements, summer camp for the kids. The only way you are going to get what you want is to use credit.
Ø You don’t have any savings set aside for your kids’ education, emergencies or retirement.
Ø You have taken out a consolidation loan or a second mortgage to pay down some debts.
Ø You have borrowed money from a family member to make ends meet.
SPECIAL NOTE: This is an excellent time to contact a professional in debt restructuring regarding your finances … before things get any worse.
THIS IS SERIOUS
At this stage, you are well on your way to severe financial trouble.
Ø You are carrying substantial (approaching your credit limit) balances on several credit cards and/or lines of credit.
Ø It is very difficult if not impossible to cover even the minimum payments each month.
Ø You are getting creditor calls regarding late or inconsistent payments.
Ø You are drawing on credit to pay your minimum payments.
Ø You are constantly feeling the stress. This can lead to health issues (quick to anger, having difficulty sleeping, generally not feeling well) as well as relationship problems at home and work.
Ø A creditor is threatening to seize assets you have pledged as security for a loan (car, boat, RV).
Ø That consolidation loan or 2nd mortgage you took out doesn’t seem to be helping.
Ø You have been denied additional credit (a credit card, mortgage, car loan) because the level of debt you are carrying.
Please, if you have not sought out professional advice about your finances… do so now!
DANGER SIGNS
Your circumstances have reached a very serious stage.
Ø Every time the phone rings you jump … you don’t want to answer fearing it’s another creditor looking for a payment. What if they start calling you at work?
Ø Keeping ahead of your payments is now a game … moving money between accounts … pay one … draw the money back off … pay it to another account and on and on.
Ø You are behind on payments that threaten your home … rent, mortgage payments and/or property taxes.
Ø You are turning to creditors of last resort … high interest loans, pay day loan advances, etc. What next?
Ø Your creditors have handed your account over to a collection agency. This indicates you are significantly behind in your payments and your creditors are losing patience.
A professional in debt restructuring may still be able to keep you out of bankruptcy but you must move quickly before that opportunity disappears!
DISASTER HAS STRUCK
Ø One or more of your creditors have started a law suit against you. If they are successful getting a court judgment against you, they can possibly garnish your wages, seize assets and place a lien on your home.
Ø Secured creditors have seized their security … your car, truck, recreational vehicles.
Ø The bank is getting ready to foreclose on your home.
PLEASE DON’T LET IT GET TO THIS STAGE … THERE IS NO NEED.
Seek the help of a qualified professional and get the results you deserve. There are ways to resolve these issues, the key is getting the process started by picking up the phone.
How Healthy are your Finances? 
