Sharonview Federal Credit Union

March Financial Fitness Challenge—7 Financial Warning Signs You Can't Ignore

There's probably something in most of us that would like to wave a magic wand or perform some sleight of hand to make money troubles just disappear. That common but irrational wish prevents us from facing financial realities.

Magical thinking gets in the way of success no matter what goal we have in mind—to ace an exam without studying, to become a concert pianist without practicing, or to pay down credit card debt while running up more debt. We all might wish our situations would improve without having to make painful choices.

Here are some key signs that your finances are in trouble:

• You have no emergency fund.
• You make routine overdrafts.
• You must choose which bills you can pay.
• You pay bills on credit or with cash advances.
• You can only make minimum credit card payments.
• You're getting collection calls.
• You're fighting or lying about money with your partner.

Any one of these situations is stressful enough, and none is sustainable. If you don't have an emergency fund, it's a matter of time before you're making overdrafts and juggling bills, paying one this payday but waiting to pay another. Collection calls follow, and so it goes.

The longer you postpone facing money issues, the longer you'll experience anxiety and pressure about them. Ironically, you're only prolonging pain instead of avoiding it.

Undoing neglect

Compounding—when we're talking about interest accruing over time as we save and invest—is a good thing. But a problem that starts small, left unattended, will compound over time, too. And in this case compounding is not a good thing.

Neglect doesn't fix money issues—action does. Here are just a few remedies:

• No emergency fund—If you're getting a tax refund, use a good part of it to set up your savings cushion. Use direct deposit and automatic transfers from checking each paycheck to divert even a small amount into savings. Avoid using those savings for anything but a true financial emergency.
• Routine overdrafts—Monitor your checking account with online account access so you know your balance most of the time. Agree, with your partner, to keep each other in the loop about payments and withdrawals so neither of you is caught off-guard by a low balance.
• Which bills to pay—See if you can set up a budget payment system for your utility bill, for example, to even out the costs from month to month.

Approach your money challenges with optimism. Once you commit to setting up good financial habits, your positive steps also will compound over time.

And remember that the people at your credit union have tools to help you make the most of your money. They are ready to help you apply solutions that will replace your warning signs with signs of genuine financial progress.

Ask for a session with a credit union financial counselor, or for referral to a counseling service your credit union staff can recommend, to learn other practical ideas to reverse financial warning signs.

Once you replace anxiety about your money with the sense of confidence and competence that comes from establishing good habits, you won't be tempted to ignore warning signs again.

Financial Fitness Challenge

Your credit union personal finance professionals bring you this website and other tools to help you make the most of your money. The Financial Fitness Challenge continues to look at ways you can make better financial habits no matter what condition the economy is in.

Each month we randomly select five winners to receive $50 Visa gift cards; we choose each month's winners only from that month's entries, so enter every month. Remember to register for the Financial Fitness Challenge.

ST
Susan Tiffany, CCUFC
askem@cuna.coop

Published March 4, 2013