Why does money management make us all groan? Is it because it’s boring, time-consuming, stressful, or all of the above? Regardless of how you feel about money management, it is a crucial part of our financial security, future, security, and life. Even though you might dislike money management, here are some signs you might need to do a little bit more planning.
1. Credit card balances. If you have a balance on more than one credit card, of more than 50% of your credit card limit, then you might need to take the reins in a bit. Any type of credit card debt is known as unsecured debt and can be deadly to your credit score as well as your overall debt management. Credit cards can come with some pretty hefty interest rates. An interest rate on top of an overall high balance and this is the beginning of a recipe for disaster. Credit card debt can get quickly out of control and can even leave you in financial ruin if not properly managed.
2. Consistent defaults. In addition to constantly having a credit card balance, if you are struggling to not only pay down the balance, but make regular monthly payments at all, and you are ending up in default as a result, then you might need to spend some time on your overall debt management plan and get. This is the first sign to any bank that an individual is struggling financially and can negatively impact your credit score all while sinking further into debt.
3. Struggling savings. If you are struggling to save any money, then your cash flow may be a problem. If cash flow is becoming a problem, then this is a true sign that your money management and debt management needs some attention. Not having a savings or not planning for emergencies is another good way to sink further into debt. Having a savings, even if it is small, can help individuals plan for emergencies and have a small nest egg stashed away for that rainy day.
4. The black hole. If you don’t know where your money is going, then your money management skills need some work. While it may seem time-consuming, stressful, and even annoying, it’s important to know where your money is going. What are you spending it on? Are you putting any in savings? What is your allotted budget for living expenses, bills, and entertainment? If you haven’t already, set a budget, set guidelines, and stick to it…no matter what, or at least until you get out of debt.
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