Six Warning Signs You May Have a Financial Problem

1. You're working overtime or have a second job just to cover your monthly expenses.
2. You are borrowing more money just to make your monthly debt payments.
3. You are able to budget only the required MINIMUM monthly payments on your credit cards.
4. Over 20% of your total mnthly income goes to payments on credit cards, loans and debts other than your mortgage.
5. You constantly are at the limit for your credit cards.
6. You may be paying bills late or using the "grace period" after the due dates on your debts.

We need to plan and to save. That involves buying what you "need" and discerning "needs" from "wants". In the final analysis, it is up to each of us to manage our finances ourselves or collect more information on how to do that. No one is going to do that for us.

Just like the mortgage mess we are in, true there were less than scrupulous mortgage brokers and bank lenders who saw the uninformed coming but if we are in an ARM with a balloon or an interest only loan (both equally undesirable) then we have only ourselves to blame. If one can't afford a loan that is payable and constant over time then perhaps buying a house is not within our immediate means.

Its time each if us attempts to understand our own financial situation, seek more information to manage it and become responsible for all the times we've said yes when we might have restrained ourselves and known that when something is too good to be true, it normally is.

The Credit Crunch

Chances are you are trying to make the most of your credit score but "the faster you go the behinder you get". Not to mention that there are so many variables that even if it LOOKS like you have stellar credit your score does not reflect it. Think about this. What incentive does any credit bureau have by helping you improve your score? It seems there is always something keeping you back from breaking the 650-700 mark. In fact, your score goes down faster than you can ever rebuild it.

Case in point. One missed or late payment may drag your score down 15-25 points in an instant but those points may take 6-12 months to recoup. As you make your payments on time the next 12 months you may be allotted a few points every month until you've made up the instant 15-25 points you've lost. That is if all remains the same.

While there are so many factors in your credit score we can't measure because we don't have the formulas, there's no sure fire guarantee that losing that 15-25 points won't occur again for another reason, say, you borrow up to the limit of your credit card and boom you are back 15-25 points again.

Monitoring your own credit is a daunting task but necessary if you are looking for any type of credit in the future. Where a score of 650 and above seemed sure of approval, credit has been tightening so securely in the banking industry that it's not enough to have less than 700. Life is not completely over under 700 but it sure is more difficult. Much higher interest rates must be swallowed and more hoops in the application process must be navigated.

In the next few posts I'll discuss some ways to build your credit score. Keep in mind, its like keeping all the balls in the air. If you just drop one you have to kind of start over.