Signs You Need to Change Your Financial Habits
We all strive to have good habits in everything we do. From eating healthy to working smart, our daily habits can be either beneficial or detrimental to our lives.
While you may excel at many things in your life, do you have positive financial habits? Being financially literate and aware of your finances are crucial to creating a lasting positive and healthy relationship with money.
Here are four warning signs that you may need to change your financial habits so you can start reversing them now.
You Are Unsure of How Much Money You Have in Your Bank Account
Not knowing how much money you have in your bank account is a big red flag that may signal an unhealthy relationship with money. This also probably means that you don’t have a budget in place. Without a budget, you’re most likely to overspend. If you don’t pay attention to how much you are able to spend based on the amount you actually have in your account could leave you with hefty overdraft fees. Start balancing your checkbook and track your spending to avoid being thrown into a financial abyss that will be difficult to get out of.
Your Avoiding Your Bills
Debt denial is a serious matter. Leaving your bills unopened will not make them go away. Ignoring your financial responsibilities can result in severe consequences. For example, if you are delinquent on payments, creditors can file a lawsuit against you in attempt to recover the amount owed. Should a judgment be put against you, the creditor can request a garnishment of your paycheck through your employer until the amount is satisfied.
You Only Pay the Minimum on Your Credit Card
When you only pay the minimum amount on your credit cards you could be facing decades of payments. If you can’t pay your credit card balances in full, the totals could add up to double or triple the original balance. Every credit card statement is required by the Credit Card Accountability, Responsibility, and Disclosure Act (CARD) to explain how long it will take to pay down your debt with just making the minimum payment. Take notice of this part of your statement. Knowing how long it will take you to pay off just one of your credit cards may be an eye-opener. If you have multiple credit cards in which you are only making the minimum, think about the magnitude of debt you could be incurring.
You Use Balance Transfers Too Often
There are some benefits to balance transfers. Taking advantage of 0% interest or lower interest rates can be helpful if you intend to play by the rules and regulations to keep these perks. However, there can be some downsides. If you are regularly using balance transfers, you could be racking up even more debt.
Consider balance transfer fees which, depending on the amount you are transferring, could be exorbitant. For, example, the average balance transfer fee is 3%. If you have a $20,000 credit card balance it will cost you $600 to transfer. Balance transfers will not deter a spending problem. Moving balances from one credit card to another will only free up more credit. This may tempt you to use the card which creates more debt. Think carefully before deciding to transfer balances as it can become a vicious cycle of mounting debt!
Recognizing the warning signs of unhealthy financial habits is the key to making changes on how you handle your money. For more information about getting out of debt and staying out, contact Tayne Law Group, P.C. Our debt relief lawyers are happy to answer any questions you may have.