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You are here: Home / Finances / Early Warning Signs of Financial Disaster

by Barry  12 Comments

Early Warning Signs of Financial Disaster

Just as road signs guide you to drive safely and your doctor advises you to look out for symptoms of health issues, it’s crucial to monitor signs in your finances that might indicate potential problems. As a financial counselor, I recommend using an online banking system as a proactive tool to help manage your finances effectively. 

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. Financial disaster doesn’t have to happen to you. Stop it before it has the chance.

Do you exhibit any of these signs?  What will you do about it?

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About Barry

Barry is the husband half of the Humorous Homemaking team. He speaks and writes mostly about personal development and personal finance issues. He is the author of From Debtor to Better: The Details of Debt and How to Get Out! and regularly speaks at conferences and other events.

Disclosure of Material Connection: Some of the links in the content above are “affiliate links.” This means if you click on the link and purchase an item, I may receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

Comment Policy: I love reading your thoughts and input on what you read here. I'm sure we'll disagree sometimes and that's okay! In those cases, do what's right for you and yours. As with any form of communication, only post comments that move the discussion in a positive direction.

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Comments

  1. Julie says

    May 22, 2013 at 5:44 pm

    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!

    Reply
    • Barry says

      May 22, 2013 at 9:28 pm

      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.

      Reply
  2. Christopher says

    May 15, 2013 at 5:22 pm

    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!

    Reply
    • Barry says

      May 15, 2013 at 7:49 pm

      Ha! We’re all ignorant about something. Thanks for your comment. 🙂

      Reply
  3. Jami says

    May 14, 2013 at 3:04 am

    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 🙂

    Reply
    • Barry says

      May 14, 2013 at 9:59 am

      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!

      Reply
  4. Wendy Briscoe says

    May 12, 2013 at 9:21 pm

    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!

    Reply
    • Stacy says

      May 13, 2013 at 7:41 am

      Wendy, you are such a sweetheart. Thank you!

      Reply
  5. Deborah Hockley says

    May 12, 2013 at 5:49 pm

    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

    Reply
    • Barry says

      May 12, 2013 at 5:57 pm

      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.

      Reply
  6. Sarah says

    May 11, 2013 at 4:50 pm

    Isn’t it a sad thing that so much of the country is in such dire straits?

    Reply
    • Stacy says

      May 11, 2013 at 9:49 pm

      It is sad, but even worse is the realization that almost no one cares about it!

      Reply


Hello! I’m Stacy!

I believe God created you to be the hero of your home. You CAN manage your home instead of it managing you. That’s why I empower women with simple solutions for their homemaking needs – because if it’s not easy, you won’t do it. {Read More…}

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