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.
- 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.
- 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.
- 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.
- 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.
- 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?
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
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.
Agreed RBull – crazy is not being productive when it comes to your FI. We’re doing what we can to avoid becoming any disaster.
Thanks RBull. How was your trip?! We’ve largely avoided these headaches in recent years but it wasn’t always that way. Live and learn!
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!
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.
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.
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.