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  • Writer's pictureJohn Greenway

9 Signs of Financial Distress

There are many indicators of financial distress. Fortunately, there are also ways out, and in the following article, we'll show you how to get there.

You pull up to the mailbox afraid to open it. After all, it's probably just going to be full of letters from debt collectors that you are trying hard to avoid. Then your phone rings and you don't even want to look at it because you're almost certain it's another bill collector calling again. Does this sound like your normal daily life? According to CNBC, the average American owes $28,900 in personal debt. Even if you don't owe that much, chances are you owe a lot if you're experiencing debt-collection letters and phone calls each day. Are you tired of living like this and are you ready for a way out? Let me help you learn the signs of a person who is in financial distress, and let me explain to you some of the options you can use to get out of the mess you are in. 1. You're Living Paycheck To Paycheck Do you live paycheck to paycheck? If so, you're not the only one. According to a recent report, 78 percent of Americans live in this fashion. Living paycheck to paycheck doesn't automatically guarantee that a person is facing financial distress but it certainly is a factor that people in financial distress face. One of the biggest problems with living paycheck to paycheck is that you literally must use the entire paycheck to get by only until your next paycheck arrives. A second problem with living like this is that you probably have no money in savings to turn to.

2. Financial Distress Means Your Entire Paycheck Goes Towards Bills And Debts A second sign is using an entire paycheck for bills and debts. After you receive your paycheck and pay your bills, is there any money left over? If not, how do you pay for groceries, gas, and everything else you need to buy? The amount of money you have after paying your bills is called your discretionary income. This is the money you can use for all the extra things you need to buy, and it is also the money you use for savings and luxury items. When you reach a point where you have no discretionary income, you are at a point of distress. At this point, you'll probably use your credit cards to buy the things you need, like food and gas for your car. 3. You Cannot Even Pay Minimum Balances On Debts Another one of the indicators of financial distress is not having enough money to even pay minimum balances owed on your debts. When you reach this point, you'll likely stop making payments on certain debts, and this is typically when the debt collectors start calling. 4. You're Transferring Balances From Card To Card There is a way to "get by" when you're facing major financial problems by transferring balances from one credit card to another but this will only work for so long. When you begin transferring balances, you gain a little bit of time but you also rack up more debt. Balance transfers are not free and using them does not pay off any debt. If you've been using these for a while, you'll reach a point when this method doesn't work anymore. You'll no longer have any credit cards to transfer your balances to, and you'll probably fall behind on the payments on some of them.

5. Your Credit Lines Are Maxed Out When you hit the point where you have no more credit, how will you pay for the necessities in life if you're used to using your credit cards for this purpose? If your credit lines are completely maxed out, it's a good indicator that you're at a point where you need help. 6. You've Exhausted Your Emergency Fund Another sign of distress is exhausting your emergency fund. Have you drained every savings account you own? Do you have any cash left? If you have no money on hand to use, the only option you'll have to pay for things is by charging the purchases. If you have no credit lines available, you'd be in quite a predicament. 7. Creditors Are Calling And Sending Letters When you start experiencing some of the signs we've already talked about, you're likely to begin missing payments on debts. As soon as this happens, you can expect your phone to start ringing and your mailbox to start filling up. Debt collectors can be relentless when trying to collect money owed yet there's not a lot you can do if you don't have any cash to use to pay them. When they call, and they will if you're past-due on your debts, make sure you learn the best techniques to use for handling these conversations. Using the right methods will help you at least get through the phone calls. 8. You've Used All The Equity In Your Home If you took out a home-equity loan on your house, this could also indicate financial problems, especially if you have no equity left in it. Instead, all you'd have is a second loan to pay for. Great, one more bill that you can't pay. 9. You're Starting To Turn To Risky Loan Types The last sign I'd like to share involves the use of risky loans. Risky loans include payday loans and car title loans. These are easy types of loans to get, as long as you have a job, but they're horribly difficult to get out of. Falling into the risky loan trap can be a nightmare for anyone, and it can be a good indication of financial distress. How many of these signs are you facing right now? Even facing just a few of them can indicate a financial state that you should view seriously and consider getting help for.

Get A Free Evaluation To Find Out The Best Way Out For Your Situation Falling into a position of financial distress happens to so many people but there is help available when you're ready for it. Instead of spending one more day wondering how you will pay your bills or being afraid to answer your phone, let us help. Contact us today to find the best way for you to find relief from your debt.

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