Never out of the blue: recognize the early signs of financial trouble
Stress about money destroys families and pushes people over the edge to depression and even suicide.
Stress about money destroys families and pushes people over the edge to depression and even suicide. Because none of this happens overnight, it is important to recognise the early signs of financial trouble and try to rectify it immediately to save your finances — and your life.
What many people don’t realise is that the trouble debt can bring may quickly escalate to a crisis that is tough to handle. In reality, ignoring money problems won’t help solve them. The only way to get out of debt or any other money issues is to take a proactive approach that deals with the problems heads on and get them under control quickly.
Here are a few ideas to detect financial stress and handle money problems.
Know the signs
As mentioned, you won’t get caught in spiralling debt overnight. Debt does build up quickly, but still you should see the problem coming. One of the early signs is falling behind on your monthly payments or having to pay for your credit card balance or your monthly payment by taking more credit. When you do that you’re not bringing your debt down. In fact, your overall outstanding debt may be growing because of all the added interest payments.
Another sign of trouble is having no clarity about your financial obligations. If you’re finding yourself scrambling to pay an invoice that you didn’t plan for or a bill that you totally overlooked, you probably have lost touch with your own budget.
Another serious red flag is having credit cards that are maxed out. Every passing month, these cards are collecting fines, charges and interest payments. This could literally double or even triple your outstanding debt within a very short period of time.
If you’re in such financial trouble, you may be scrambling to find a solution and also you may be blaming yourself, your spouse or children for accumulating the debt. All of this stress may not be constructive to getting out of your current crisis. What you really need to do is to take a more positive attitude — while keeping expenses under control — and being able to rework the debt.
For example, you should meet with your bank, and ask for a way to reschedule or refinance your debt. If you bring the monthly payment within a reasonable amount that you can handle, this could be the first step to paying it down. Even if you have no idea how this process works, approach your bank officer and see what they can offer. In many cases, the bank’s interest is in having you pay what you owe, so they’ll try to work out something for you.
Think before you sign
Unless you see a clear path to repayment, never take any debt or commit to future payments. This includes housing rent, car lease costs, etc. Whenever you commit to future payments by signing checks — blank or not — you are putting yourself in a situation where you won’t have many options out. In many cases, the fine print on the related agreements can land you in jail if you fail to pay.
That is why don’t expect that your finances are going to miraculously change within a few months and allow you to take on this extra debt comfortably. Again, have a clear idea of how you will pay off any debt you’re taking before you sign any paperwork. If the situation change to the worse after you’ve committed to some big financial burden, approach the lender immediately. Don’t ever wait until you fall behind on your payments to begin the process. The quicker you try to rework your debt — while you’re still in a good standing — the more likely that you will be get a viable solution fast, and avoid many unnecessary charges and penalties.
Rania Oteify, a former Gulf News Business Features Editor, is a Seattle-based editor.