There’s something to be said about paying attention to signs. On the roadways, they make sure you know how fast you can drive, when to stop and even where you are along your route. Your doctor tells you to watch for signs of certain medical problems. So as your financial counselor, I’m going to give you some signs to watch out for that may signal a looming financial disaster.
Living Paycheck to Paycheck
As I wrote in my book (shameless plug: From Debtor to Better is now available in paperback!), the average American is three weeks away from being bankrupt, unable to pay bills or put food on the table. And “the average American” means roughly 70% of Americans based on the studies I found. What happens when there’s a glitch in the company payroll or a bank error and your paycheck doesn’t get deposited on time? For most of you, that’s a scary possibility.
Peter & Paul
A severe symptom of looming disaster is robbing Peter each month to pay Paul. When you have to use one credit card to pay another or when you have to use your emergency fund every month to make ends meet, you’re on your way to disaster.
Constantly Fighting With Your Spouse
There are going to be times you’ll disagree with your spouse. But when you constantly fight like cats and dogs, you’re headed for a mess. The number one cause of divorce in America is money-related problems. If you can’t agree with your spouse about money, this has disaster written all over it.
Hiding Spending
Can you be honest about your spending with yourself, your spouse, or even a counselor like me? It is very common that you make purchases throughout a given day that you don’t want someone else to know about. Why? What are you hiding? Be careful what you’re hiding and from whom – it could be dangerous.
Minimum Payment Syndrome
The culture we live in says if you can afford the payments, you can afford to buy it. I think that is stupid. Why? Because the lending industry has proven over and over that when the payments aren’t within your reach, they’ll just do something to “make it work.” Want proof? Less than 10 years ago, financing a car for five years was pretty much the max. Now, six and even seven years are possibilities, with six being the new norm. Cars have become a lot more expensive and people have bought into the lie that it’s no big deal because the payments aren’t much more than they used to be. If you’re considering a big purchase and are asking, “how much are payments” instead of “how much does it cost” you could be on the brink of disaster.
Embracing Ignorance
Stupidity is bad…really bad. There is no cure for stupid because stupid is willingly making a poor choice or refusing to learn a better way. Ignorance is okay – there is already a known cure for ignorance. It is called education. If you don’t understand something about your financial situation, FIGURE IT OUT (and get help if need be). Otherwise, you’re embracing ignorance and that can quickly lead to stupid decisions that could lead disastrous financial consequences.
Avoiding Reality
Reality is a quick and often cruel teacher. We don’t like being told we were wrong. We don’t like learning that we made mistakes. We surely don’t like being told our way isn’t the best way to do something. So we avoid reality checks like doing a simple budget. The first thing I ask when someone tells me they can’t pay all their bills is whether or not they’re doing a budget. 99% of the time, the answer is “no” or “I gave up.” No matter how bad reality may look, if you won’t face it, you’re on dangerous ground.
So what can you do if you’re on the path for disaster? Start by facing reality. What is it that is good about your situation? What is bad? Where are you falling short and what can you do about it? Ask yourself these questions and then take action. It may mean sitting down with your spouse and confessing. It may mean doing a budget for the first time (or trying again). It may mean getting some education (God forbid we read a book!). Financial disaster doesn’t have to happen to you. Stop it before it has the chance. The experts at Vigilant Wealth Management can provide you with personalized, expert advice within a range of needs, allowing for more personalized attention from financial experts, learn more about the team at their website.
Do you exhibit any of these signs? What will you do about it?
Thank you for this helpful post. But what do I do if I have done a budget and still can’t make ends meet? We have cut down everything we can spare – paid off the car, no more subscriptions. We can make ends meet if we don’t buy food. That’s what I’m down to. And I cut coupons. But what is the next step? We are going into debt every month because I just can’t make it all fit. How do ppl make it on one income?
Thanks!
This is a TOUGH situation, but not an impossible one. I’m going to send you an email shortly with some thoughts. For now – the absolute first step is to pause……….and breathe! You are not alone and thousands of other people are in your exact situation RIGHT NOW. God doesn’t have you there without reason. More thoughts to follow via email shortly.
I appreciate your post Barry. It’s good to hear that I am not stupid, just ignorant. Thanks be to God there is a cure for that.
I’ve been on the hunt for resources to begin my education and I am grateful for the link to your book. I’m looking forward to reading it!
Ha! We’re all ignorant about something. Thanks for your comment. 🙂
Love these tips Barry!! We lived paycheck to paycheck for a while and have been working hard to build up our 6 month’s emergency fund 🙂
I’m always thrilled to read comments like yours, Jami. 6 months of savings makes a world of difference if something goes wrong. Great job!
Mrs. Stacy, Just wanted to wish you a very Happy Mother’s Day. Thank you for helping us better Moms and wiser home economists. Hope your day was filled with hugs, laughter and butterfly kisses!
Wendy, you are such a sweetheart. Thank you!
Hi Stacy, Hi Barry,
Can’t begin to tell you how blessed we’ve been by your blog1 I’ve never budgeted… my husband took care of bills until his death. Now I’m trying to learn, but don’t understand how to figure in what I call “all the variables”. Meat’s on sale this month would take me over budget this month, but save on grocery budget next month? How do figure in and forecast changing prices, unexpected house repairs, my children or pets getting sick….and on and on… Soooo, I’m extremely thankful for your free e-book, Barry! But here’s the problem, I homeschool the children, who have online classes, which are only accessible on our one laptop…this one. Toward that end, and because I’m old fashioned and feel a book should be on paper in my hot little hand so I can make little notes in the margin… I’ve tried to print it and always get a printer error. The printer seems alright. Should I be doing something different from the file to get it to print? Thanks bunches!! Debbie
Hmm. It is just a PDF file so it should print like any other file. I’ve printed it myself dozens of times. If you open up another file and try to print or try a test page does it work? If so, let me know and I’ll email you the file so you can try it that way.
Isn’t it a sad thing that so much of the country is in such dire straits?
It is sad, but even worse is the realization that almost no one cares about it!