Warnings Signs of Financial Trouble Ahead

Most people tend to ignore the warning signs or red flags when it comes to financial matters. It's human nature to ignore bad results and continue to focus on the habit and hoping that everything is going to be fine. Remember, definition of insanity is to keep doing the same thing over and over again and expecting different results. Make sure you do not go insane when it comes to your financial future because your family and loved ones are counting on you. Financial trouble just doesn't start all of a sudden and most of the time you can see some early signs of bad things yet to come. Most people see these signs but very few acts to prevent a impending disaster.

Here are some of the common red flags that you are going to see when your financial life is falling apart. Also, pay close attention to the signs at the end of the list because they will help you identify your loved one of significant other in financial trouble. They may be ignoring them but if you know what to look for, you might be able to avert a disaster.

You’re always late in paying your bills and it is not because you forgot the due date
You are living from paycheck to paycheck and worry about overdrawn your checking account.
Your paychecks are already allocated to expenses in advance.
If you have an unexpected expense such as auto repair or home repair, you'll unable to pay for it without putting it on a credit card.
You are using cash advances on you credit cards, inspite of the fact that interest rates are around 30%.
You're applying to new credit card to transfer balances off the old one so that you can make minimum payment.
Interest payment on your credit card is over 30% of the total payment every month.
You don't want to open your monthly credit card statement.
You have started to use store charge cards for your regular small item purchases everyday.
You keep requesting cash access checks from your credit card companies.
You have started to loan against your retirement account to pay for regular bills.
You are having trouble sleeping every night due to debt but don't want to tell your significant other.
You're awake at late hours watching TV or on computer and don't want to face your family.
You have become very protective about the bills in mail and don't want anyone else to open them.
Pawn shop is no longer a strange place for you and you have used it couple of time to borrow money.
You have visited payday loan place couple of time and even considered or used a auto title loan
You're angry with your family of loved ones for not being considerate of you but at the same time you don't want them to know anything.
You have looked up Bankruptcy attorneys on the internet or in phone book.
You're shredding your mails on a regular basis to avoid being caught by your partner or family.
Your credit score is in free fall and has dropped at least by 100 point in last one year
You are a homeowner but home equity loans or line of credit is no longer an option for debt payoff.

Managing Your Debt

If your debt load has risen to an uncomfortable level, you’re not alone. Millions of Americans have spent too much on credit and then learned – the hard way – how difficult it can be to pay it off. Here are some tips for lowering your debt level and getting your life back:

First of all, before you even collect your bills and think about payment plan, gain the trust of your loved ones or partner. These are the most important people in your life and you want to make sure they understand the mental pressure and financial mess you're dealing with. Most people will find it difficult to share it with their family something they worked so hard to hide. But hiding anymore is not an option. You want their support and efforts to help you get out of your debt and there is only one way to do it - You must ask for it.

Once your family and/or partner is on the same page, sit down and document all the debt you currently have. Total all the payment due every month to see if it is already beyond your monthly income. Remember paying monthly minimum is not an option on credit card and if you keep doing so, they will eat you alive in long run. So you have to create a strategy to pay your debt off. If you can't make monthly payments, research to see if you could sell some asset such as an expensive car or boat to get some debt paid off. If you own home, look to see if you can obtain a home equity loan. Remember, a home equity loan is the most risky method to pay off your unsecured debt such as credit cards. If you have not changed your spending habits, a home equity loan will backfire and you'll lose your home as well. So only consider this option if you have made a firm commitment to change as a person.

If these options are not available, you'll need to get professionals involved. Contact the Consumer Credit Counseling Service in your area. Many nonprofit debt counseling centers across the country will advice you for a low fee or at no charge. Make sure you understand the process as well as associated costs before sign the dotted line. There are plenty of shady agencies out there who would rob you in the name of credit counseling. So make sure you're comfortable with them and can trust them. They can often help you work out a repayment plan with your creditors

Make a written plan. Make a list of all your bills and their amounts. Figure out when each bill can be paid. Contact your creditors. Contact your credit card company or other creditors to try to get your rate lowered or a different payment plan worked out. Making more than minimum payment is the key to pay off credit card debt. You'll be amazed to see how much money you're paying on interest every month. Be aware of credit card rates and fees. Educate yourself about the annual fees, current interest rates, finance charges, cash-advance fees, late fees, penalty pricing and any other fees tied to your card. This knowledge can help you make better decisions about which card to use and how to manage your card. If you have more than 10 credit cards, and have your debt consolidated with a loan or another credit card, cancel them. If you keep them around, you'll end up using them again. Don’t take on any new debt. Stop using your credit cards. Say no to offers for credit cards, debt consolidation, and second mortgages.

Don't rely on Cash advances from credit cards. Cash advances can destroy your life. Only get a cash advance when it is absolutely necessary. Higher interest rates (than you’re paying for card purchases) are usually charged, and the rates are put into effect immediately, without a thirty-day grace period. Most banks also charge a service fee based on how much cash you’re withdrawing. The same applies to personalized “checks” some credit card companies may send you. If you have a overdraft credit line on your checking account, make sure you stop using it. Interest rate is probably in double digits and it doesn't help a bit.

Transfer balances to cards to lower interest rates. Find credit cards that offer a low introductory rate. ALso pick card with longer introductory period(one year as compared to six months). Write down the date when offer will expire and do something before that happens. Either pay if off or transfer it to another card.

And here is the final piece of advice - DO NOT GIVE UP. Reducing your debt is challenging, but don’t stop trying. It’s one of the most important things you can do for a better financial future.