Financial Breakdown: How to spot money woes before they hit

Often overlooked when you're discussing finances, budgeting and spending is not so much how to do those things correctly but more importantly how to spot well ahead of time if you're doing any of those things incorrectly. The truth is when it comes to money we often operate inside a bubble, assuming everything we are doing is perfectly fine and if we come up a few dollars short this month or the next, then we chalk it up to a few extra cups of coffee at Starbucks or watching one movie too many through our cable or satellite provider. A sure fire sign that you're headed for financial peril or even potential bankruptcy is the simple act of paying bills late or, in some cases, not at all. The general feeling that paying late from time to time isn't enviable but often necessary means you're having money problems, whether you want to admit it or not. If the money issue is recognized appropriately, the key is to take something off your budget at the moment or indefinitely until the matter is resolved. Not doing so is going to create more future issues. If you aren't able to make your monthly bills, that's obviously not a good thing. But using credit cards to pay utilities or even other credit cards is equally as bad. Even worse is borrowing money from the bank or work related credit union to cover expenses. That money isn't free and just goes into the debt pool that is already expanding. Smaller but equally eye popping examples that your finances aren't in perfect order are things like extending terms of finances because you want a lower payment (think a five year car loan that turns into six) or attempting to apply for a credit card or loan only to be turned down emphatically, even though only a few months or years ago securing loans or credit was no problem. That means something has happened with your credit score or debt to income ratio that needs addressed. Particularly around the holiday season or when shopping is running rampant and the tendency is to add more debt, even though your income isn't changing for the better. Unfortunately, some of these behaviors can be the beginning signs that your financial freedom is going to turn into a debt prison rather quickly. Ignoring these could be the difference between reversing the trend and becoming another debt statistic.

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