5 signs you’re a financial disaster

Managing money is simple but it doesn’t mean it’s easy.  I’ve been guilty of some of these things in the past.  I wasn’t off the rails but close enough to take initiative to get my financial act together.  Here are 5 signs you might be a financial disaster.

  1. You don’t have an emergency fund.

A fact of life is…life happens and bad things go with it.  $hit breaks down.  These realities often require us to fork over money.  An emergency fund provides some piece of mind when you’re losing yours.  I think if you don’t have a small emergency fund (whatever that amount might be for you) you’re running some financial risk.

  1. You don’t budget – to some degree.

We don’t have a strict budget in our house but rather a bi-weekly forecast of expenses.  You can see what I mean here.   A budget helps you pay the bills, pay yourself, and keep some money left over to have some fun.  All three of these things are good things in my book.

  1. You don’t think you can retire.

I’ve heard the phrase “freedom 85” a few times at my workplace.  If you don’t think you can retire it’s probably time for a financial checkup.

  1. You don’t pay off your credit cards.

With personal lines of credit and home equity lines of credit borrowing costs at a fraction of credit card interest, most people should never have credit card debt.  Spend all you want but you can only spend so much until you have to pay the piper.

  1. You let bills slide.

Everyone experiences some degree of stress over finances at one point or another in their lives.  Even if your financial situation is on terra firma it’s easy to forget bills and let them slide.  If you find this is happening to you, it’s probably time to get your financial house in order.

Even if you avoid all these pitfalls, an income loss can happen that can put you or your family in a financial tailspin.  The best most of us can strive for is to avoid these situations as much as possible.

What other signs demonstrate you’re a financial disaster or one waiting to happen?

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9 Responses to "5 signs you’re a financial disaster"

  1. 6. You don’t think about what you’ll live off when you retire.
    Retirement and how it will be supported is not a priority for most till it may be too late. Items 1 to 5 are one’s major concerns till probably their 40’s.

    1. Well, as you know for #6, we are striving for a passive income stream to live off from. That should keep our capital intact for messy times like these. That’s the plan, hopefully we can make that happen.

  2. “Freedom 85” – I’ve never heard that before but found it really funny 🙂

    That said – I think that the idea that people should retire at (55/60/65/67…) and then spend the rest (possibly 40 years) of their lives doing nothing productive and living off (savings/pensions/govt handouts) is crazy. Retirement at 65 was dreamed up when the typical person could expect to die within a few years (and probably started working well before they were 20). As life-expectancy has increased, and people tend to be healthy through their 70s, then it makes sense that people should continue to work til a later age. My father (just turned 75) has phased-in retirement over the past year and a bit – but I imagine once he becomes completely retired he’ll probably find the next interesting thing to work on. My mother ‘retired’ at 65, but has continued both paid employment and volunteer work to keep her busy since then. I have every intention of doing the same as I get older – not because I’m financially unprepared for retirement, but because I like to keep my brain occupied, and choose to do work that I find intellectually challenging.

    1. Thanks Michele.

      I certainly won’t “retire” in the traditional sense. It will be my intention to work all my life, as long as I can actually, but at least I will have (I hope) greater flexibility in what I choose to do and when I want to do it. If I feel like “I don’t want to go into work this day”, then I won’t.

      I can’t imaging sitting around watching TV or surfing the net all day. I’d go bonkers.

      Ultimately it will be depend on my/our health status. Sometimes you’re also forced out of the workforce. We’re just hoping we can work on our own terms in another 10 years; a lofty goal based on our objectives but goals are fun.

  3. I am always amazed when people say to me, in all seriousness, that they just assume they can never retire. Never! That sounds so awful. Many of these people have confided in me that they don’t have any savings and they carry serious debt on their credit cards. These are people making high incomes so it is entirely habit and waste. It causes me so much stress to think about this!

    1. I’ve heard “freedom 85” a few times in the workplace and it makes me laugh, especially given most of these people have a good pension to rely on eventually if they work there for 30+ years.

  4. I agree with the post 100% and with the comments other than the “the idea that people should retire at (55/60/65/67…) and then spend the rest (possibly 40 years) of their lives doing nothing productive and living off (savings/pensions/govt handouts) is crazy”.

    That’s exactly what I wanted and what I am enjoying right now! (other than no government handouts).

    Crazy is not being productive when it comes to your own financial independence.


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