Are your finances getting off track and out of control?
Originally published in the District News, December 2017.
Sometimes it’s not always obvious that you are facing financial challenges but there are some indicators to watch for so you can get back on track with some guidance.
A few warning signs to watch for of financial difficulty include:
relying on credit to pay everyday living expenses like groceries and gas;
falling behind on utility bills;
bouncing cheques or pre-authorized debits in your bank account;
running out of money between paydays and using pay-day loans;
taking cash advances from one credit card to pay another;
arguing with family members about money;
making only minimum monthly payments on your debts;
not reducing credit card or line of credit balances; cashing in RRSPs or other investments to pay debts;
receiving past due payment notices or phone calls from your creditors and staying awake at night worrying about finances.
If you are experiencing one or more of these warning signs, it does not mean that you are doomed. It simply means that it is time to take stock of your financial world to try to understand how and why it has changed.
Consider going through your credit statements and bank records and see how much debt you had twelve months ago compared to what debt you have now. Do the same for your assets – what new assets have you acquired in the last year; how much money have you put into investment or saving (or taken out of them).
Then, you have to start asking yourself questions.
If your debt has increased, why?
Was it just living expenses funded by debt?
Did your financial assets increase or decrease and why?
Did you use savings or cash investments to make debt payments and/or fund living expenses?
Are you living beyond your means by using credit or depleting financial assets?
The earlier you identify warning signs of financial challenges and recognize the driving factors, the easier it will be to address those factors and get back on track. But you need a track - a plan - to get back on so life won't feel so chaotic and pressured.
If you aren’t taking stock of your financial world regularly, it is definitely a worthy goal for you. It's not a once-and-for-all occasion, it is a regular method of tying your life's goals to a sustainable plan for reaching them so you don't lose your grip and cause yourself unnecessary stress.