Savings - There is very little money in the savings account. The risks increase further with no savings account at all.
Credit Cards - How much of the credit limit is owed? If you have used or almost used up your credit limit, you have a debt problem to fix. Pay attention to the interest rates on each card. There is more money to save in the long run if you attack the higher rates first.
Juggling Money - Do you select which bills get paid each week? Household needs get priority, but how long do the others have to wait? Are you getting charged late or overdraft fees because your paycheck didn't cover all the expenses that pay period?
Alternative Loans - Have you taken out at least one payday loan or cash advance from a credit card in order to pay a priority or other debt bill? Both of these options are expensive. If these loans are your only source of help for emergency costs, the debt crisis is an advanced problem.
Debt Load - If your total debt (minus mortgage) is 20% or more of your monthly take home income, it's a problem. A budget can usually handle 10-15%. This amount does include the car payment. Make sure the cost of the car will not jeopardize your finances.
A good working budget will easily include a home, vehicle, utilities, gas and food. If the budget does not cover these bills, plus something extra for savings and other unexpected costs, you are living an unaffordable lifestyle. Find areas to cut back on and redirect the financial problem before it becomes a disaster.
- Stop using payday lenders completely. Even if it takes you another month to pay off the debt, do it. It is a lot of money every few weeks that your budget needs elsewhere.
- Hide the credit cards until you can get the debt paid off or at least paid down. Don't cancel them unless you absolutely have to. Cancelling cards will hurt your credit score in a different way. If you must, cancel more recently acquired ones since longevity is favored by the credit bureaus.
- Would your budget run smoother if you traded in your car for a cheaper model and lower payment? How about a model with better gas mileage? Less expensive models cost less to fix than the fancier counterparts. Look at long term costs when purchasing a vehicle.