There are plenty of people out there struggling to make ends meet financially. In many cases, they are living paycheck to paycheck or lacking the savings needed for an emergency or unexpected expense. Something as drastic as filing for bankruptcy might seem a ways away, but if their current situation continues, bankruptcy could one day be a reality.
The good news is a simple assessment can help you get a handle on your situation and make changes now before it is too late. How can you tell if your current lifestyle is pushing you closer and closer toward a need for bankruptcy?
State of Your Credit Cards
When was the last time you evaluated your credit situation? Do you have several cards and are they all maxed out? Are you only able to pay the minimum due on each card each month? Is the situation worse and you are over your limit or facing late fees on a regular basis? If these scenarios sound familiar, your spiral might have already begun. You likely are already in a position where getting any additional credit would be difficult and it could be just a matter of months before you are faced with complete financial ruin.
If possible, put a bit extra toward each credit card payment each month. This might be enough to improve your situation and cut a significant amount of time from how long it will take you to pay off the balance entirely. To calculate payments on a loan each month to pay it off by a certain date, check out CNN’s debt repayment calculator.
As mentioned earlier, if you are consistently late with making credit card payments, you are heading toward a downfall. Estimates show about one in every 20 people are at least 30 days late with a credit card or other non-mortgage loan payment. An occasional late payment is not the end of the world, but as the saying goes, if you have too much month left at the end of each paycheck, it is a serious red flag. Not only do you face late fees, creditors could act to protect their risk by lowering your available credit or increasing your interest rate.
Raiding Accounts to Make Ends Meet
You might assume if you have personal or retirement savings you are in good shape financially, but if you are borrowing from these accounts it is a sign of impending financial disaster. Needing a loan from your 401(k) account is a sign that you are struggling financially. It can also cause more harm than good in the long run if you are hit with a tax penalty that drives you further into debt. Before borrowing from any savings you have, consider the ramifications and determine if you have a better option. This is truly a bad move because most retirement accounts are completely exempt in bankruptcy. It is very sad when we see a client who drained a retirement account and STILL needs to file a bankruptcy. If they had turned for help earlier, they would be filing the same bankruptcy but KEEPING their retirement savings.
Asking for Loans Has Become a Regular Occurrence
Are you constantly asking friends or family to lend you money? Have you applied for a payday loan with a high interest rate? If you are searching for quick-fix borrowing options just to make ends meet it is a sign of a bigger problem.
The good news is, even if these red flags apply to you and your habits have you headed into financial difficulty, you still have options.
To discuss your financial situation and determine your next best step, contact the law office of Frank J. LaPerch, PC at 845-942-5500.