Are you currently facing huge financial commitments? You may be financially broke without any solutions or possible outcomes.
Managing utility bills, rents, school fees and daily expenses alongside loans on a restricted paycheck can be daunting for many. This can end up in a situation where debts add up, exceeding the current repayment capacity of an individual. You may find it difficult making your repayments every month on time even though you wish to. This difficulty in taking care of your financial commitments is a sign of being ‘financially broke‘.
The warning indicators
Here are the key five warning indicators of emerging financial mishaps.
You have difficulty in settling your monthly bills
This is a crucial warning sign that something is not right with your finances. This means that you have the desire to settle your dues in full on a monthly basis, but are unable to do so. This difficulty will only increase with time since you will receive any future bills with non-payment charges along with added penalties thereon.
You are depending only on your paycheck
You are looming down a dangerous path if you depend on each consequent paycheck for your survival without any savings or emergency fund. All this leads in the direction towards financial disaster.
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You use credit cards for everyday expenses
If you are overextended enough to be depending only on your credit cards, your finances might be heading into a very serious situation. Credit purchase means you are buying items you primarily cannot afford.
You carry credit card debts for stretched periods
Even if you don’t expect it, your outstanding debt will be multiplied at compounding interest on credit cards. This can put you on a dangerous debt spiral that can broke.
You dilute your savings or investments for settling debts
Continuously utilizing your savings and investments to repay your debts is a warning sign that you are witnessing serious financial crises.
Risks of being financially broke
You should not have more debt than you can fail to repay. Credit card debt, particularly, has an exponential characteristic and can quickly add up at a vast pace. When you constantly overburden your debts beyond your repayment, the entire debt strain will grow inevitably and become more