Signs Indicating You Are Financially Over-Committed?
Edited by Honey B Wackx
For many of us, it would be great if we could just save some ten percent of our salary or money as many financial advisers recommend. But it is difficult to do if one is living from paycheck to paycheck.
Do you find yourself rushing from the bank to pay off a payday loan after cashing your paycheck? If you do, don’t feel like you’re the only one doing that. This has become so commonplace that you’ll find these ridiculously high-rate lenders on nearly every street corner.
Just today I heard a similar advertisement for a high-rate lender on the TV and it’s becoming more often on TV than ever before, at least in my area. The pitch on TV about their loan was “Yes, it’s expensive but much cheaper than a payday loan.”
While all too common, this practice of borrowing between paydays or similar is a sure sign that you’re in deep financial trouble. Many other signs also indicate that you are financially over-committed.
Some Signs You are Over-committed Financially
* Falling behind in your payments to credit card companies and other lenders.
* Using your credit cards to pay for day-to-day necessities such as food and gasoline.
* Taking out a cash loan from one credit card to make the payment on another one or to pay other bills.
* Making the minimum required payments on your credit card bills.
* Refinancing your home to consolidate all of your debts into your regular mortgage payment.
* Borrowing from friends or family just to get by until your next payday. This a sign of serious financial trouble and can also put a strain on precious relationships.
* Taking out a second mortgage on your home to pay off other debts that have gotten out of control.
* Finding yourself needing to get a loan from your 401K to pay off high-interest loans and credit card bills. This is a serious mistake. It not only depletes your retirement fund but carries penalties and high taxes from early withdrawals.
* Having little or no savings to fall back on during an emergency or in the event of job loss.
I just indicated some signs indicating you are over-committed financially in part I of this article.
If any or most of these apply to you, then you need help right away. Either figure out yourself how to get yourself out of the financial rut or seek outside help. However, beware of any company that promises to contact your debtors to settle or reduce your payments. Far too many of these so-called debt reduction plans are nothing more than scams set up to prey on your desperation.
You should seek recommendations of reputable companies if you can, and also check out non-profit corporations that handle such services. Also, you can check with the BBB (Better Business Bureau) for any company you might plan to do business with to see their level of complaints. Note, however, that not all companies belong to the BBB, and since the BBB is a for-profit company itself don’t put all your faith in its ratings.
Here are several things you can do to help your situation, starting now.
* Free up money to begin paying down your bills. Do away with all non-essentials such as movie rentals, cable television, and internet access (unless you work online).
* Destroy your credit cards so that you won’t be tempted to use them again.
* Pack your own healthy lunches and cook meals at home instead of eating out.
* Do away with expensive cell phone plans. People have survived for a millennium without them and you can too. If you are married to your cell phone then check out some prepaid plans to see if any would save you money. Sometimes just knowing you will run out of minutes if you don’t use your cell phone wisely could spur you to use it sparingly.
* Carpool or take a train or bus if applicable to save money on gas and car expenses.
One final recommendation is to read Dave Ramsey’s “Financial Peace” or “Financial Peace Revisited”. You can find a copy in most bookstores or Amazon. Many people have brought themselves back from the brink of bankruptcy by following his proven, common-sense advice.
Honey B is learning about luck so on Wish Good Luck she can improve her luck and income.