Recently, I found myself driving in the wee hours of the morning on an unfamiliar road in Kentucky. As I attempted to steer my car through uncharted territory in the predawn, an unexpected event occurred. A family of five raccoons (they may actually have been a gang; I didn’t ask) – traveled in a straight line across my path. I swerved to avoid the parade of trash pandas and slammed on the brakes. Later, I was grateful the car behind me saw me slow down.
Thankful I didn’t hear the thump thump of a poor forest creature with awful traffic etiquette, I caught my breath and continued on to my destination. Those little fellas (or ladies, again I didn’t ask) came out of nowhere. There was no warning. There were no signs or signals. I had to think on my feet and luckily no one was harmed.
Believe it or not, your money does have a warning system. There are financial warning signs and signals you may be headed toward a money mess. And there are key factors to keep you from crashing into an unknown obstacle in your financial path.
Warning Sign #1: You Don’t Know How Much You Owe
Debt creeps in slowly and then multiplies quickly. I know this from personal experience. As you may know, we accrued over $127k in debt over a span of 9 years. We in turn paid off that amount in just under four years. When asked how we racked up that much debt, our typical response is by not paying attention. There was nothing grand – other than a few educational degrees – to show for it. We had over $16k in credit card debt as a result of not having an emergency fund and using it when we got into trouble.
It wasn’t until we sat down and tallied our entire debt load that we realized some major changes were needed.
Tips:
- Try not to freak out when you add up the numbers. Knowledge is power even if it feels overwhelming.
- Don’t forget to include all consumer debt – credit cards, student loans, car loans, and any other debt.
- Create a spreadsheet or database to track any updates.
Warning Sign #2: You Don’t Know How Much You Make
Of equal importance is knowing how much money you make. It may sound ridiculous at first, studies show one third of couples don’t know how much their significant other earns. Eliminating debt isn’t a complex formula. You need to spend less than you make. But to do that, you need to know how much you make.
Tips:
- Look over last year’s tax forms to get a ballpark estimate of how much you earned.
- Be sure to evaluate both annual and weekly or biweekly income.
- If you’re married share all of your numbers with your significant other.
- Consider asking for a raise if you haven’t had one in awhile.
Warning Sign #3: You Consistently Pay Bills Late
Some bills are paid online. Others you may send through the mail. You may even pay some in person. But if you notice that you’re consistently struggling to pay bills on time, it could be a sign of trouble ahead. Not only will you incur late fines and fees, you’ll also create chaos and clutter in your personal finances.
Tips:
- Use a budgeting software to track when bills are due.
- Set reminders on your phone or laptop to help remind you to make payments.
- Opt for an autopay feature when possible. Be sure there’s enough in your account to cover the cost though.
Warning Sign #4: You Fight with Your Spouse About Money Weekly
Heed this warning sign sooner rather than later. It could mean trouble for both your money and your marriage. Money fights and disagreements rank among the top reasons couples divorce. If this is your current situation, there’s no shame or guilt. In fact, you’re pretty normal. But, it can be better if you take steps toward a healthier relationship.
Tips:
- Have that first awkward conversation. Avoid bringing up the topic in the middle of a fight, though.
- Resource yourself with books, podcasts, articles, etc. to learn how to communicate more effectively.
- Have clear cut numbers and goals in mind when you broach the subject.
- Ask for outside help like a pastor or a counselor.
Warning Sign #5: You Can’t Cover a Basic Emergency
It’s never a question of if the unexpected will happen, but when. If you can’t cover a basic emergency, you’ll likely end up in debt. No matter if it’s medical, household, or auto related, you need a plan for how you’ll pay for emergencies.
Tips:
- Begin saving immediately. Like, don’t even finish reading this post.
- Sell items to fund your emergency fund. Roll change. Do anything you can to begin building this fund.
- Save somewhere between $1000 and $2000 to begin with. If you’ve eliminated all consumer debt, save anywhere from 3 to 6 months of monthly expenses.
- Consider saving a set percentage of income – no matter how small – from each check to begin saving.
- Don’t touch a dime of your fund unless it’s a true emergency. Refill the fund ASAP if you do need to use it.
Pay attention to the signs, friends. If you encounter any of the above, more difficult days might lay ahead if you don’t begin down a path toward change, your financial situation will become more dire. Slam on the brakes now to prevent problems in the future.
Our new book Your Money, Your Marriage is now available! Be sure to check out videos on managing money together on Facebook.
My book is now available: Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After. You can also check out The Debt Free Devotional
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