The Life Transition Blog
Warning Signs That Finances Are Off Track
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How do you know that your finances (or those of a loved one) are off track? There are both obvious and more subtle signs. Let’s run through the top reasons that clients call me for help handling their day to day finances.
Piled up mail and being overwhelmed by it is the most common first sign of trouble in my experience. Once the mail pile gets too big, many people find that it is just easier not to open it. And once the mail isn’t opened you’re on the slippery slope to trouble. If this describes you, do yourself a favor and get help right away. It is much easier to get back on track when you don’t get too far off!
Unpaid bills are the second most common problem and often (but not always) results from the piled up mail. Sometimes I meet with people who have a very organized system for handling the incoming bills but then slip up with remembering to actually pay them. There is a relatively easy fix for many of these bills which is to set up automatic payments from your bank account or charges to a credit card, assuming that your cash flow permits this.
Late fees often result from unpaid bills and interest charges are typically piled on as well. So if you notice that more and more of your accounts have either of these added on, it is time to get back some control of the situation. Even worse are bouncing checks or excessive overdraft fees. Both of these are signs that you are not managing your cash flow well at all.
Mounting credit card debt can be a sign that you are living beyond your means and need to rein things in. If you are paying only your minimum balance every month (and especially if you are late making that minimum payment) then you are digging yourself deeper and deeper into a hole.
Sometimes a sign for older adults is a new habit of making frequent small charitable donations. Many charities have a strategy of mailing to older people very frequently and asking for small donations, hoping that they will get in the habit of writing those checks every few weeks. I had one client who was making thirty donations of $5 each every month to various organizations. He had no idea that he was spending $1800 every year on this hobby! If this was part of his philanthropic plan and he was doing this with intent then I’d have no issue with it (assuming that he could afford it) but in this case he could not afford it and didn’t realize the impact these seemingly small donations had on his finances.
A new habit of buying lottery tickets or participating in sweepstakes can be another warning sign, especially among older adults. They are often hoping to strike it rich to pay off their debts or leave money for their families and this is another scam that targets the elderly.
Calls from creditors are an obvious and late sign that your finances are in trouble. Do your best not to get to this point by getting some help early.