Six Financial Sins

Kick Bad Habits to Improve your Credit Rating

Many families survive by living paycheck to paycheck. Some are victims of unemployment and the financial impact of the recession. Others are victims of their own behavior. They have gotten over their head in debt as a result of bad financial decisions. Statistics show most Americans live from paycheck to paycheck while average household savings is a fraction of that.

You have probably heard about the warning signs that indicate that your debt is at or near a crisis level. If you pay bills with credit card because you do not have cash, pay only the minimum on your accounts, or pay only part of utility, insurance or mortgage bills, then you know you are in financial deep water.

If you are ever going to get out of the deep end, you need to understand how you got into debt in the first place. While the reasons may be obvious for people who have lost jobs, or have one debt like a mortgage that is draining their budgets. For others, debt may be something that gradually crept into their lives, until one day they find themselves struggling to make ends meet. Like every problem, there will be warning signs if you know what to look for. Here are six of signs that you are headed for financial problems.

• You are always applying for credit, and opening new lines of credit whenever it is available. You cannot go shopping these without a department store clerk offering a credit card application. What better way to entice the impulse shopper than to give him or her a line of credit right in the middle of a sea full of merchandise. Shopping is addictive. There are even support groups for obsessive shoppers. As with any obsession, you need to JUST SAY NO when someone offers you a credit card.
• You will buy anything if it is on sale. My dad used to say that if you do not need an item, any price is too high. That is a good rule to follow. That sale item will end up costing you a much higher price in the long run if you pay for it with a credit card.
• You shop without a list or buying merchandise not on your list. Making a list causes you think about your shopping trip. If you follow the list, you will not fall prey to impulse purchases. If you still find yourself straying from you list, then you are setting yourself up for difficult times.
• You are satisfied that the ability to make payment means you can afford the purchase. This is not a good gauge of your financial security. What happens if you have an emergency that affects your income?
• You do not balance your checkbook. This is the "head in the sand" approach to financial management. But no matter how hard you try, you cannot bury your debt in a pile of disorganized paperwork.
• You do not open your mail or even look at your monthly balances. Out of sight, out of mind does not pay the bills either.

These six financial sins will keep you from getting your finances in order. If you are guilty of one or more, then it is time you made some changes.