The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • Submit an Article
  • Books
  • Categories
  • Coaching
  • Book Lynnette
  • Money Coach University™
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • Submit an Article
No Result
View All Result
The Money Coach
No Result
View All Result

3 Signs You’re a Financial Train Wreck Waiting to Happen

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Family Finances
Reading Time: 4 mins read
17
SHARES
284
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

As a Money Coach, I am often contacted by someone who claims to be a hot financial mess. In fact, many people think that they’re financial train wrecks just waiting to happen.

Actually, some of them are right: their economic circumstances are indeed dire. But some people are simply excessively worried, at a loss for how to fix a problem, or are being overly dramatic about their situations. How can you tell the difference?

I’ve identified three areas that signal that you could, in fact, be a financial train wreck waiting to happen. I’ve also identified three additional, less obvious red flags that could also mean you’re in store for future economic problems. (This article will tell you the first three; my next column will tell you the next three).

Simply having any of these six problems at one point in time won’t make you financially doomed. But if you find that these are chronic issues – year after year – then it’s definitely time to straighten up your financial act.

If you recognize yourself in this list below, don’t be offended and don’t feel hopeless. At one point, I had all these classic warning signs too. But I turned my financial life around – and you can too.

Red Flag# 1: Excessive Debt

The first indicator that you’re a financial train wreck waiting to happen is if you have too much debt.

Having too much debt of any kind sets you up for potential failure over the long haul. Whether it’s too much credit card debt – due to excessive shopping, poor money management, or overspending – or too much mortgage debt that could burden you for years, if not decades to come; none of it is good news.

Excessive debt is a burden, and frankly, a noose around your neck. The same can be true even when you’re taking on so-called “good” forms of debt like student loans.

What good it is to rack up $60,000 or $80,000 worth of student loan debt, get out of school, and perhaps not be able to get a job? Or maybe you only get a job that’s paying, say, $35,000 a year. That’s too much college debt relative to your income and your career prospects.

Worst case scenario? You could wind up in bankruptcy, divorced over money problems, or even a fugitive in another country running away from debts.

So, having too much debt is definitely one sign that you could be a financial train wreck waiting to happen. And it’s a problem area you should aim to resolve immediately.

For tips to get out of debt, read the free online edition of my New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom.

Red Flag #2: Bad Credit

If you have a poor credit rating, that could also set you up for major problems down the road.

Bad credit means that you haven’t been paying your bills on time, you likely have too many debts or accounts in collection, and you haven’t been managing credit wisely.

Consequently, unless your fix your credit problems, you’re going to pay more for all of your future borrowing costs.

That mortgage you’ll need, the student loan, the credit card offer, the business loan you might want and so on – all of those things are going to come at a higher price if you have poor credit rating.

You’re also going to pay more for a host of things that you need throughout your life, like life insurance and your car insurance. Having a poor credit rating can even derail your career prospects.

Worse cast scenario: Your bad credit ruins your job/business opportunities, you constantly get turned down for loans and credit, or when you do get approved, everything comes at a sky-high cost for you, because the subprime lenders are just waiting to take advantage of your desperate circumstances.

I know it sounds awful. And that’s one reason you should work to improve your credit score ASAP in order to avoid being a financial train wreck.

To learn some easy ways to boost your credit rating, watch this quick video about how to increase your FICO score.

Red Flag #3: No Savings

If you have no savings whatsoever, that’s a sign that you have not been operating with a proper budget, and that you don’t yet have the fiscal discipline required to set aside a little something just in case anything goes wrong.

And poor savers, or folks who can’t save money at all, invariably find themselves pretty much laying flat down on the railroad track of life. Unfortunately, the train of life – think of it as the “Reality Express” – comes running over these people time and time again.

So, if you have no savings, you’re just asking for trouble and you are a financial train wreck waiting to happen.

Worst case scenario: Some unforeseen whammy hits you, like divorce. Then another problem happens, like unemployment or a steep downturn in your business. And then a third emergency, medical illness, piles onto your already full plate of financial woes. Without any savings to act as your cash cushion, you can’t withstand all these economic body blows. So you fall into major problems like homelessness or having to eat at local soup kitchens.

Again, I don’t mean to depress you. But I want to issue a wake-up call to those of you with no savings or emergency funds.

Why do you think it is that we now have a record 46 million Americans on food stamps and nearly 50% of all U.S. citizens living in poverty or classified as “low income”? Part of the answer is that the lack of financial literacy and financial education in this country is appalling, and people haven’t been taught basic money-management principles, like how to save for emergencies.

In my next column, I’ll share three additional situations that you may not have considered as red flags, but that are also crucial to your financial health.

Tags: bad creditno savingsYour Fico Score
Previous Post

3 Ways a Peer-to-Peer Loan is Better for Your Credit Score Than Credit Card Debt

Next Post

5 Tips to Help You Achieve Your Financial Goals in the New Year

Related Posts

Auto repair shop. Cars open bonnet parked in garage for repair and maintenance service. Car check up at service station. Car waiting for inspection in auto repair shop. Car maintenance and checklist.

How to Find Auto Repair Shops That Offer Payment Plans

by AskTheMoneyCoach

Car repairs can be expensive, and unexpected breakdowns can put a strain on your budget. But don't worry, there are auto repair shops that offer payment plans to help you get your car fixed without breaking the bank. Keep reading to find out how to locate these mechanics and get...

Banks vs. Credit Unions pros and cons written on a blackboard.

Credit Unions vs. Banks: Which One is Better For You

by AskTheMoneyCoach

When it comes to managing your finances, you have several options. Two of the most popular are credit unions and banks. Both offer financial services, but there are differences between the two. In this article, we’ll compare credit unions vs. banks and help you decide which one is better for...

extra cash

Ten Proven Ways to Make Extra Cash

by Guest Contributor

People are always searching for different ways to make some extra cash. With the cost of living rising and bills piling up, it can be hard to make ends meet. Luckily, there are plenty of creative and easy ways to generate additional income without having to work long hours or...

Small business african female owner smiling while turning sign for opening of cafe. Happy afro-american waitress entrepreneur in apron present sign on door

Buy Black: 20 Powerful Reasons to Support Black-Owned Businesses

by Lynnette Khalfani-Cox, The Money Coach

In February, you’ll see a lot of people on social media and elsewhere urging you to Buy Black and purchase goods and services from Black-owned businesses. And that’s great! Let’s normalize supporting Black entrepreneurs beyond Black History Month. But as the co-owner of a Black-owned firm for two decades (TheMoneyCoach.net LLC,...

AskTheMoneyCoach.com

4 Ways to Save or Make Money Without Leaving Home

by Lynnette Khalfani-Cox, The Money Coach

With remote work gaining in popularity and inflation hitting everyone's budgets, more people are staying home these days.  But how can you stay home and still make or save money? Here are four ideas to help you keep some cash in your wallet -- or generate extra money, all without...

bury a loved one

What to Do if You Cannot Afford to Bury a Loved One Due to COVID-19 

by Lynnette Khalfani-Cox, The Money Coach

Currently, the average cost of a funeral is between $7,000 and $10,000. While life insurance can help cover some of the expenses, not every insurance plan includes burial assistance. 

make a will

COVID-19 Reminds Us Of the Need to Make a Will or Trust

by Lynnette Khalfani-Cox, The Money Coach

Like most things these days, you can make a will online. But the question really is: should you create an online will versus having a will drawn up the traditional way – by using a lawyer?

Load More

Popular Posts

  • Car repair

    What to Do If You Can’t Afford a Car Repair Bill

    1526 shares
    Share 610 Tweet 382
  • What to Do if Your Spouse Stole Money From You

    1308 shares
    Share 523 Tweet 327
  • What to Do If You Can’t Afford to Leave Your Spouse

    1273 shares
    Share 509 Tweet 318
  • Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too)

    1129 shares
    Share 451 Tweet 282
  • What Do All Those Strange Codes In My Credit Report Mean?

    899 shares
    Share 360 Tweet 225
  • Which Credit Report is More Important: Equifax, Experian or TransUnion?

    866 shares
    Share 346 Tweet 217
  • Do This Now If Your Wages Were Not Reported

    853 shares
    Share 341 Tweet 213

Categories

  • Bankruptcy
  • Budgeting
  • Building Wealth
  • Careers
  • Couples and Money
  • Coupons and Deals
  • Covid-19
  • Covid-19 Video
  • Credit Cards
  • Credit Reports
  • Credit Scores
  • Crypto
  • Debt
  • Entrepreneurship
  • Family Finances
  • Featured
  • Identity Theft
  • Insurance
  • Investing
  • Loans
  • Paying for College
  • Personal Finance
  • Press Releases
  • Real Estate
  • Retirement
  • Saving Money
  • Scams
  • Student Loans
  • Taxes
  • Uncategorized

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

RSS / Sitemap /Submit an Article / Privacy Policy / LynnetteKhalfaniCox.com

No Result
View All Result
  • Books
  • Categories
  • Contact Lynnette
  • Get Coaching
  • Book Lynnette
  • Money Coach University™
  • Home
  • Subscribe to Newsletter
  • Submit an Article

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist