In this series I am covering the 24 tell-tale signs that you could be in financial trouble. Over the next few weeks I will be presenting these signs, how to identify them and tips on how to address the issue.
To be financially independent you have to pay your bills. If you continue to depend on others to help you out when you are running low on cash, you are not independent. While emergencies to arise and you may need to borrow money from others on rare occasions, if this is happening regularly to help you pay the rent, make a car payment or even buy groceries, then you are already in trouble.
As with the other signs you have to be honest with yourself. Do you pay your own way or do you rely on others to make up the difference? When thinking about this it is important to consider that “others” don’t have to be people. This can also mean credit cards or loans. Do you find yourself running short of cash at the end of the month and need to put some bills on a credit card? It doesn’t matter if you borrow the money from family or borrow it from a creditor, if you don’t have the money available you are facing trouble.
Make Changes in Your Life
If you find yourself seeking help from outside sources just to pay your essential bills you need to take a hard look at why this is. Is it because of a lack of income or loss of income or is it simply a case where you spend more than you earn? Finding the underlying cause will be critical in rectifying the situation.
If lack of income is the cause you need to try and find additional income as soon as possible. Unfortunately this is easier said than done. It could mean getting a second job or having a non-working spouse begin to work. While it may not be the most fun way to get back on track it is key to becoming financially responsible. To accelerate this process even more, find additional income while at the same time cutting expenses. Not only will you have more money to pay the bills, but having fewer bills will allow you to reduce that debt or build a savings even faster.
If you already have a decent income but find money tight because of expenses simply finding more income won’t solve your problem. This is a case of spending as much or more than you make. It could be you are simply repaying old debt, it could be living in more house than you can afford. Whatever the case may be there are probably unhealthy attitudes about money that has led to this point. Here you need to really focus on creating a budget and learning to manage your spending habits appropriately.
Financial independence leads to wealth and it is up to you to make the right decisions with your money. Relying on others, whether friends and family or on credit will impede your progress towards becoming financially independent over the long-term. Borrowing can be a short-term solution and is sometimes unavoidable, but using it as a crutch to get through life will hold you back from reaching your goals.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.