Spotting Financial Danger Signs

San Diego, CA. One of the most difficult obstacles credit and debt counselors face when dealing with their clients is that consumers aren't always honest with themselves about their own financial situation. Too often, counselors talk with people who are way over their head in debt, yet they genuinely feel that their credit practices are just fine, " said Paul Richard, RFC - Executive Director of the nonprofit ICFE, based in San Diego, CA. The ICFE is dedicated to helping consumers become better spenders, regular savers, wise users of credit and thereby creating new investors in America.

"If you have a credit problem, the first and most important step is to admit to yourself that you need help. This is also probably the most difficult hurdle to clear for most people because they feel that to do so would be an admission of financial failure. The “real” failure, however, is in not getting help and, instead, digging yourself deeper and deeper into debt.," the ICFE says.

Whether you think you're having a problem or not, take a quick minute to reflect on your current financial state by reviewing the following “financial danger signs.” If any of them feel close to home, you may want to consider contacting an accredited, nonprofit, credit counselor for an appointment.

Financial Danger Signs:

1. You use your credit cards regularly and rarely pay more than the required minimum payment. Simple mathematics makes approach a this is a one-way road to disaster. Eventually, your debt will become so high that you may not even be able to make the minimum payment.
   
2. You're often or always late on regular monthly bills. If you find yourself receiving the new bill before paying off the previous one on a regular basis, then you simply don't have control over your finances. These monthly bills represent your basic needs, so you should be able to pay for them without any problem.
   
3. You get in frequent arguments about money with your spouse, partner or roommate. This is usually a sure sign that you and the person you're arguing with are overly stressed about finances, probably for good reason.
   
4. You purchase necessary consumable items, like food and gas, with a credit card. A healthy attitude toward credit is one in which you only use it in emergencies or to pay for important items, with the intention of paying them off quickly. Otherwise, credit is simply a convenience that comes at a very high price.
   
5. You have no idea what your total debt is. If you can't estimate within $500 or $1,000 what your total debt is, your spending is way out of control. Chances are when you receive the monthly statements, you don't even look at the balance, and that's not a good approach.
   
6. You have recently taken out a cash advance on a credit card to pay a monthly bill. Typically, credit cards charge a higher interest rate and allow no grace period on cash advances. They also charge a service fee, so it simply doesn't make financial sense to pay your bills like this.

If you're experiencing two or more of these financial danger signs, it is essential that you do something to turn your credit practices around quickly. Otherwise you may be facing collection or legal actions by your creditors.

People whose finances are in a downturn, often discover they are paying too much for things because they fail to comparison shop. That, like borrowing to meet regular expenses, is another form of overspending. Overall, the best way to increase your personal cash flow is to be conscious of how much money you spend and why. Comparison shopping the consumer's best, but least used defense against overspending.

For information about how to set up and implement a spending-plan (with a one page work sheet) for personal and/or family finances, please visit the ICFE's Web page at: http://www.icfe.info. The site also includes helpful sections on mending spending, increasing savings, using credit wisely, plus tips on spending for household and grocery items.

To receive the same information by mail, please send $1 and a self-addressed, 60 cent stamped envelope to: ICFE Money Helps
PO Box 34070
San Diego, CA 92163.

©  Paul Richard, RFC and the Institute for Consumer Financial Education. All rights reserved.