Sabah
Karimi
Nearly
three-quarters of Americans are living paycheck to paycheck and don't have
emergency savings, according to a bankrate.com survey last year.
But
you don't have to become part of that statistic. If you want to stay on top of
your finances this year, make a commitment to review your budget regularly and
take an honest look at your financial standing – otherwise you could dig
yourself deep into financial problems that may not be easy to recover from.
Here
are seven warning signs it's time for a financial check-up:
1.
You keep missing bill due dates. Late payment fees for services like
Internet or cable can seriously add up, and you could get in even deeper
financial trouble if you don't pay off your credit card bill on time and in
full each month. If you're consistently missing due dates on those credit card
bills, utilities or even housing payments, it's time to restructure your budget. Take a closer
look at your cash flow, and make sure you are accounting for all forms of
revenue and expenses in your budget.
2.
You're opening more lines of credit. If you're having a hard time breaking
your credit card spending habit or find yourself depending on credit, it's time
to focus on your financial health. Opening more lines of credit when you are
already carrying a heavy debt load can hurt your credit score. If you find yourself
exploring more credit offers or loan options just to get by, stop and
re-evaluate your finances.
3.
You're making credit card payments...with other credit cards. While making credit
card payments with another card is a convenient payment option, you will set
yourself back financially by doing so. Paying off one debt by accumulating more
debt – even if it's lower-interest debt – will keep you stuck in a vicious debt
cycle. Instead, look for opportunities to cut your expenses and earn more money
to help pay down your credit card debt.
4.
You're not contributing to a savings account each month. Saving at least 10
percent of your monthly income is a healthy goal. However, that's not always
possible when you haven't taken the reins on your cash flow or don't have an
accurate idea of your monthly expenses. When there's just no room to save money
each month, it may be time to review your budget and set some new goals. Even a
modest contribution toward a savings account each month will help you develop
the self-discipline to save on a regular basis.
5.
You have no idea the state of your credit. Even if you don't plan on buying a
home or car in the near future, you will want to make sure you have an accurate
idea of your creditworthiness. Use annualcreditreport.com to order a free copy
of your credit report you are entitled to at least once a year. Checking your credit report can also make it
easier to catch signs of identity theft.
6.
You have nothing in reserves. If you've been dipping into your
savings regularly or have just stopped contributing to your savings and
investment accounts, it's time to take a closer look at your spending habits
and determine whether you are working with a realistic budget. Having no
reserves could set you up for financial ruin in the event of a medical
emergency, job loss or other financial crisis.
7.
You're paying bills with your 401(k). If you find yourself dipping into your
401(k) just to take care of monthly expenses, it's like you're robbing from
your future self – plus you'll probably have to pay taxes and fees on early
withdrawals. Instead of taking money from your retirement account, consider supplementing your income with a second job or
scaling back expenses to better manage your money.
Sabah
Karimi writes
for the financial blog Wise Bread, where you can find resources on how to land
more jobs by improving your online reputation.