10 Signs You're In Worse Financial Shape Than You Realize

10 Signs You're In Worse Financial Shape Than You Realize
See Gallery
10 Signs You're In Worse Financial Shape Than You Realize
Financial planners suggest you have a minimum of three months of living expenses in a savings account, but some say 12 months is better. If you don't have any savings, you won't be able to pay your bills the minute your car breaks down, you have an unexpected trip to the emergency room, or you're unemployed. The problem can compound if you put those expenses on a high-interest-rate credit card and are unable to pay it off for a long time.
While an occasional slip-up in your checking account may not mean much, if you've paid overdraft fees more than once, you're clearly spending on the edge of what your paycheck can support.
Those "convenience" checks are something you should shred when you get them. You're simply expanding your debt level by paying a bill with a credit card, which will mean you'll pay hundreds or thousands of dollars in interest rather than actually paying that bill.
This move will definitely hurt your credit score: Using more than 25 to 30 percent of your credit card limit will lower your credit score a little, and going above it will drive it down fast. On top of that, you'll have to pay over-limit fees until you can get the balance back down, and you're likely to pay a higher interest rate on that credit card and on other future lines of credit.
Making the minimum payment on time every month won't hurt your credit score, but you'll never, ever make a dent in that credit card balance that way. If the minimum payment is all you can afford, then you've got some belt tightening to do.
If you're entering every possible lottery hoping for a big bonus, or counting on an inheritance, you're expecting something to solve your problems that may not come to pass. Put a plan into place to handle your own finances and then, if a windfall does come your way, you'll be in even better shape financially.
Your 401(k) is money that belongs to you, but it's meant to be there for your retirement years, not to pay your electric bill or your kid's orthodontist bills when you're in your 40s. Even if you somehow find a way to pay the money back, you're still going to be out on the interest earnings while that money was out of the account on top of any early withdrawal penalties and taxes you may have to pay.
Money is one of the main things couples fight about, but if you're hiding spending from each other or keeping the credit card bill out of sight, then you could be headed for a financial disaster, if not divorce court.
You may already be in a financial free fall if you've got debt collectors hounding you.
If any of these warning signs rings true, it's time to face facts and put yourself on the path to financial freedom. These free courses on DailyFinance will guide you through everything from setting goals you can achieve to getting out of debt and planning for retirement.

If your money woes are too overwhelming, contact a nonprofit credit counselor (find one at the National Foundation for Credit Counseling) who can help you develop a strategy to prevent your financial breakdown.