Thursday, October 31, 2019

Ten Indicators of Financial Stress

President Calvin Coolidge once said “There is no independence quite so important as living within your means.” Unfortunately, debt problems often creep up on people gradually until they get to a point where it is difficult to make even minimum payments on credit cards.
Therefore, it is useful to have a list of “red flags” of debt problems to use as a reference point. 
Below is a list of ten common financial stress indicators that debtors often experience:

¨     Dipping into savings to pay debts and/or routine household bills
¨     Having household expenses and/or debts grow faster than income
¨     Taking out new loans before previous loans are repaid
¨     Charging more each month than the amount made in debt repayments
¨     “Juggling” the payment of bills from month to month
¨     Using a checking account overdraft or credit card cash advance to pay expenses’
¨     Having late fees assessed on loan and credit card payments
¨     Using credit for items that used to be purchased with cash
¨     Having a consumer debt-to- income ratio (total of monthly consumer debt payments divided by monthly take-home pay) of 20% or above
¨     Having negative information (e.g., late payments, judgments, and collections) in a credit report
If one or more of the above situations are happening to you, reach out for help. Contact creditors to request payment concessions or a non-profit credit-counseling agency that can help you draft a “livable” budget and negotiate with creditors on your behalf.
Most importantly, do not try to “borrow your way out of debt;” it simply cannot be done. In addition, do not ignore a growing debt problem and the ten financial stress indicators listed above. Like untreated cancer, debt problems will only continue to get worse and take over your life.

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