Warning signs of Financial Difficulty

Jul 9, 2020 | Credit Counselling

Written by Crystal Buhler

Written by Crystal Buhler

By Tanner McAuley

When you think about your finances, what comes to mind? Does thinking about it bring on uncertainness and anxiety? Although having debt is normal, it can quickly turn into an unmanageable weight. For this reason it is a topic that many do not like to think about. It is easy to ignore the warning signs of financial trouble.

The monthly disposable income guideline indicates that debt payments (excluding mortgages) should represent 5-15% of your monthly net income (income after deductions). In addition, the annual disposable income guideline suggests that consumer debt exceeding 15% of total annual net pay can mean serious financial trouble. Once the debt reaches 23%, they will find their budgets to be very tight.

There are tons of self assessment tools online to help you learn new aspects of responsible credit use or discover appropriate aspects of your credit management. Here are some warning signs that you might be headed towards financial trouble:

  • Are you making only minimum payments on your credit cards?

It might feel like you are on top of your credit cards by making the monthly minimum payments, but this might mean that your debt is growing and becoming a risk of being unmanageable. Did you know that if you only owe $1,000.00 on a credit card with a 20% interest rate and you make monthly payments of $25.00, it will take you over 5 years to pay off and you would pay an additional $600. in interest. You can check how long it will take you to pay off your card here.

  • Are you using credit because you do not have the money for everyday expenses?

If you find you are using your credit card for everyday things halfway through your pay period, it could be a sign you are heading for trouble. Creating a budget is a great way to start planning on where you are going to spend your money. There are tons of online templates and free budgets online. For example, this website has a great free budget to keep track of expenses on your phone to see where you spend your money most.

  • Are your debts creating anxiety or stress?

Lastly, finances can cause people stress in the best of situations. However, if you find yourself anxious about the amount of debt you have, it could be another warning sign. If you are feeling like the weight is too much to handle, there are support lines in all the areas we serve. Also, you could read our recent blog about finances during COVID-19 HERE.

Manitoba Suicide Prevention & Support Line: 1-877-435-7170 (1-877-HELP170)

Manitoba Farm, Rural, and Northern Support Services: supportline.ca  

NWT Help Line: 1-800-661-0844 or visit their facebook page. 

Yukon Mental Wellness and Substance Use Services (MWSU): 1-866-456-3838

If you feel like you are heading for financial trouble and you want to have a safe, no pressure talk about your debts, book a free consultation with our LIT today.

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