Tragedy can strike suddenly, as recent high-profile deaths have highlighted.  Just think of the sudden deaths in the news of late:  Luke Perry, of 90210 fame, dead at 52 from a stroke.  John Singleton, visionary director of “Boyz N The Hood,” dead at 51 from a stroke.  And who can forget Bill Paxton, who most recently starred in the series “Training Day,” dead at 63 from a stroke. 

Tragedy can strike at any time in any place.  But usually, as in the case of strokes or other heart-related conditions, there are warning signs like hypertension, diabetes or a sedentary lifestyle, among others.  And it can be the same with your finances.  It may seem that Murphy has set up permanent residence in your spare bedroom, but is it really Murphy, or something else?  Could it be that we are simply ignoring the warning signs of impending financial tragedy?

True, life happens, and there are some things that you cannot anticipate or plan for.  But, like health problems, there are usually warning signs that something bad is about to happen.  When we ignore those signs, it usually doesn’t end well for us.  But when we heed them, we can most times ward off or at the very least, mitigate, the effects of a sudden financial storm.  With that in mind, this article will look at 7 signs that let you know that you are walking a financial tightrope and are probably headed for a financial tragedy very soon.

SIGN #1- You frequently overdraft your account.

Ah, overdraft protection.  That safety net that banks so gladly offer to save you from miscalculation.  “Go ahead,” they say, “write that check and use that debit card.  Don’t worry about keeping track of your balance.  We got you covered for just a teensy, weensy little fee.”  Yup, banks make a mint off fees and overdraft fees are among the top money makers for them.  But if you are constantly falling back on overdraft protection, it’s a sign of something else more serious.  It’s a sign that you are not paying attention to your spending.  And if you’re not paying proper attention to your spending, eventually you will run out of money to spend.  Then comes the tragedy.  So, get on a budget and track your spending before you become another broke statistic.

SIGN #2- You have to resort to credit cards frequently for “emergencies.”

I’ve written about this before.  Credit cards are no substitute for an emergency savings account.  Resorting to credit cards for “emergencies” or worse, every day expenses, means you are spending beyond your means.  This slow creep will eventually max out your credit card limit and then what are you going to do?  It also means you are not planning properly for the future.  Things like car maintenance, household maintenance items and sickness can be expected and planned for.  The car is going to need new tires.  The boiler will break.  The roof will leak and someone in your home will need to visit the doctor at least annually.  These things can be planned for by putting a line item in your monthly budget for each and stashing away cash for those expected expenses.  Then when they come, they are not “emergencies” but planned-for events that you already have the money set aside for.  The second thing you can do is build a starter emergency fund of at least $1,000.  That catches most of the little stuff and keeps you from giving into the temptation to charge it.  Once you get out of debt you can go ahead and build that up to a 3-6 months of living expenses.

SIGN #3- Your 401k is not ok.

Have you, like me, neglected in your youth to recognize the value of contributing to your 401k or other retirement plan?  It can hurt you dearly in terms of lost savings and income growth which can amount to hundreds of thousands of dollars or more.  Failure to pay attention to this warning sign can mean spending your golden years working right up to the day you die or living on the Alpo plan.  Get my drift?  But have no fear.  No matter where you are in life it’s not too late.  Start taking advantage of employer 401k matches and max out all your retirement account options now and you’ll be surprised at how market growth and compound interest combine to make you breathe a lot easier in retirement even if you have as little as 10 years to go.

SIGN #4- You regularly run out of money before your next paycheck comes.

Find yourself having too much month at the end of your money?  That’s a sign of one or two things.  Either you are spending beyond your means or you are just not making enough to cover your basic living expenses.  If the first is the case, sell stuff, lose the car payment, slash your spending and put a halt to retail therapy.  If the second is the case, look for ways to boost your income with a side hustle, overtime, job change or second job.  If not, tragedy will come when you miss as little as one paycheck.

SIGN #5- You have maxed out all your credit cards.

This is a flashing red light with alarm bells ringing!  At this point you’ve run out of the means to support your lifestyle and the creditors are knocking at your door and blowing up your phone.  Repo’s, hits to your credit and eviction are marching towards you over the horizon.  Get a hold of the situation now.  Cut up the credit cards, get on a written budget and get your outgo in line with your income.  Or, you could just ignore the signs and suffer any number of the things I mentioned.  Your choice.

SIGN #6- You are consistently late paying most bills.

If this is you, then you already know the pain of late fees.  Add all those up in the course of a month or year and they can cost you dearly.  Worse, like in sign #5, stuff will start getting repossessed and turned off, like your lights and gas.  Get on a written budget, put alerts on your calendar as to when certain bills are due and set up automatic payments if you are just finding that you are being forgetful and it’s not really a money issue.  If you do, you will find life to be a lot less stressful and considerably more enjoyable.

SIGN #7- You would rather shop than save.

I’m not going to soft soap this one.  This one right here is a sign of lack of self-control and maturity.  Children want what they want when they want it.  They don’t understand the concept of the word “no.”  Adults, on the other hand, know the value of delaying gratification in return for something greater later on.  Things like no stress, no debt, fat bank and retirement accounts and the joys of being able to give to help others in need.  If this is you, stop it right now.  Track your spending and see what your carefree lifestyle is costing you.  Calculate what that money would be worth in 10, 20 or 30 years if invested in good mutual funds.  Realize that it is costing you and your family your future.  And look to other ways to boost your mood like volunteering, having family game nights, connecting with friends or enjoying a wide range of free activities in your area.  

Yes, life happens.  But it doesn’t have to happen to you more than it has to.  Instead, happen to your life.  Take control of your finances.  Pay attention to the warning signs.  If any of these apply to you, take action now!  Educate yourself on personal finance.  You don’t have the luxury of being neglectful of this important area of your life.  Get a financial coach if you feel the need.  Sometimes we truly lack knowledge of the actions we need to take.  Other times we know what we need to do but we just need someone to remind us of why we need to do it.  A financial coach can help in either case.  If you choose to take control of your life today, you can avoid being another tragic statistic tomorrow.  All the best to you and remember, own it, be it, achieve it!

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