Are you living beyond your means, spending more money than you’re earning? You’re not alone. The National Foundation for Credit Counseling says that for a lot of families, financial difficulties have become “business as usual.” Here are 3 warning signs that you could be on the road to ruin:

  • You carry a credit card balance. The average household carries $6,000 in credit card debt. And the interest on that alone runs more than $1,000 a year. Your best bet? Stop using your credit cards. And pay off as much of your balance as you can every month, until it hits zero.

  • You fall for deals like “no payments and no interest for 6 months.” Scott Bilker is the author of Talk Your Way Out of Credit Card Debt. And he says if you don’t pay the entire balance by the end of the promotion – in this case, within six months – they’ll slap you with sky-high interest rates. And they are often charged retroactively to the date of purchase. So, your $1,800 washer-dryer combo instantly becomes a $2,000 liability. And you’re still no closer to paying it off. Before you sign on the dotted line, ask yourself: “If I don’t have the money to pay for this now, will I really have enough to pay this off in 6 months?” If the answer’s no, walk away.

  • If you lost your job, you’d be in deep trouble. Financial planner Sheryl Garrett suggests each of us should set aside enough money to cover at least six months worth of living expenses. Otherwise, we’re literally one lay-off, or major illness away from bankruptcy. Your best bet is to start setting aside 10 percent of every paycheck.

Lesson Expert

Mike Christian

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