It feels like the ATM is directly poking fun at you as it sticks out a paper tongue. Two words are neatly printed out on the bank slip – “Insufficient funds”. You figured as much, but the zero-balance staring back at you is a clear indication that there are dark clouds gathering on your personal finance horizon. After all, it’s only the 15th of the month, and you still have two weeks before payday.
Unfortunately, the reality is that many South Africans don’t recognise the danger signs of being in debt. If you constantly feel like you have ‘more month than money’ in your bank account, you might well be stuck in a cycle that, if left unchecked, could lead to financial ruin.
If running out of money mid-month doesn’t shake you into reality, here are 16 more warnings that you might be losing control of your personal finances:If you’ve started having sleepless nights over your financial situation and you are continuously thinking about money, then you’re in the first stage of financial stress.
- You fall into the frightening statistic of being one of many South Africans who save less than 1% of their salary. That means if you earn R20 000 per month, you are saving less than R200 per month.
- All your credit cards are maxed and you can barely make the minimum monthly repayments.
- Every time an unrecognisable number appears on your cellphone, you purposefully avoid the call because you are fearful that it might be a creditor looking for an overdue payment.
- You get into heated arguments about money with your spouse, children and other family members.
- You’ve found yourself using credit to buy basic items like food.
- You’ve got an accounts drawer, where unopened accounts pile up for months and you can’t remember when last you read your bank and credit card statements.
- You’ve started cancelling important insurance products, such as medical aid, life insurance, and car insurance.
- You’re into retail therapy to alleviate stress. Just remember that trying to spend your way out of a financial crisis simply exacerbates the problem.
- You lie to family and friends to get them to lend you money.
- You are falling behind on repayments for big ticket items like your car.
- You’ve found yourself responding to any personal loan marketing message in a desperate attempt to get your hands on more money.
- You’ve made all your investments “paid-up”, or worse yet, cashed them in.
- You are behind on school fees.
- You are late on your rent.
- You’ve started selling off personal items at Pawn shops to get your hands on some cash.
If any of the above-mentioned points are hitting home, you are in the financial danger zone.
This is the first step
Admit to yourself that you are in a jam. Sure, it’s not going to magically make the creditors go away, but at some point, you need to face up to reality.
The second step is to seek professional financial advice.
If you have a family member or friend you can lean on, start with asking them if they wouldn’t mind assisting you in unravelling the financial problem you are knotted up in?
It sometimes helps to get a new, unbiased perspective on matters like this from people who really care.
The third step is to work out a road to recovery.
If you’ve managed to address the situation before it becomes too serious, list all your debts. Start with the largest debts that attract the highest amounts of interest. Work out a plan to knock off your largest debts first. Once that debt is settled, it’s going to free up money in your budget to work on paying off the next bit of debt.
What if you feel like you are in over your head?
Perhaps it’s time to meet with a debt counsellor?
Try to recognise the signs before it’s too late, because it is preferable for debt counsellors to work with someone who is just heading down the wrong path, rather than with someone who’s already near the end of the road.
Make a thorough assessment of your personal finances before you meet with a debt counsellor so that you have a comprehensive picture of your financial status and which issues require immediate attention.
Until next time.
The Wise About Life Team