Most people complain about all types of bills. Or they wish they had more income for vacations, clothes or fancy cars. However, there is a significant difference in wanting more money and needing more money.
Because complaining about money is so generalized, most people do not sufficiently know when they are heading towards a difficult financial situation.
What to watch out for
Luckily, there are warning signs that adults can look out for and address early, including:
- Dipping into your 401(k) – 401(k)s or IRAs are specifically designed to help workers save for retirement. It is supposed to be a cushion to live your best life after you’re done working. However, dipping into these accounts to pay off credit is a major red flag for most workers.
- Using credit cards to pay off other credit cards – Credit cards can be useful tools or resources in the right hands. However, they are also dangerous if a person is desperate. If you can’t make the minimum payments on your credit cards through your income, you may need to reevaluate your budget.
- You took out a home equity loan, and it did nothing – Many people fall back on mortgages or home equity loans to recoup financial losses. But it’s a warning sign if you’re still overwhelmed after taking out a massive loan against your biggest asset.
- You couldn’t afford a medical emergency – Most Americans admit to fear surrounding medical expenses. However, it can be especially taxing if you cannot afford a simple medication or visit to your doctor, much less an emergency.
- Your name is in a lawsuit – creditors can use many methods to retrieve money from debtors, including bringing you into a lawsuit. It sounds terrifying, especially when you have to spend more money to get yourself out of the suit.
These are just some of the warning signs. It’s important to note that it may look different if you’re married, have children or live alone.
If you feel like you see warning signs around every corner, consider researching your options for financial relief. You can file for bankruptcy and slowly pay back your debts over a specific period. It is up to you to see the signs and determine the best path for you.