Poor Money Management – Signs Of Poor Handling
What Are The Signs Of Poor Money Management?
Money problems are the number one cause of relationship problems. If one person handles the finances while the other has poor money management skills, tempers flare as stress heightens.
If a couple has mismanaged their money, they will get turned down for loans with good interest rates which cause them to seek alternate financing options at much higher and undesirable rates. The couple will end up spending a good portion of their money on this needed, but unwanted debt. This could even drive them into bankruptcy.
People rarely carry cash these days. Most purchases are made with a credit card. Not tracking your spending with a credit card very closely could lead to carrying high balances on your credit card which is another sign of poor money management.
Credit cards often have a higher interest rates, adding hundreds or more dollars onto your already increased debt. Carrying high balances on your credit cards harms your credit score, and you can be deemed to have too much debt to income if you apply for a loan.
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Proper Budgeting Can Alleviate Some Aspects of Poor Money Management
Life is full of the unexpected. Unfortunately, much of the unexpected causes financial setbacks, but there is help with money management. One of the most important aspects when budgeting is to have an emergency savings that can carry you for 6 months if you should be unable to work. Figure out what you spend in a month and develop a personal budgeting worksheet. That figure x6 should always be the minimum amount you have in your emergency savings. Never plan to rely on applying for a loan when disaster hits. Some of the poor money management decisions come from desperate times. If you plan accordingly now, you can sail through emergencies should they strike and you will find that budgeting worksheets can be a big help.
Late payments that you make on a bill are a sign of mismanaged finances. Your credit is greatly affected by your ability to pay your bills on time. Late payments show up on your credit and bring down your score. Remember, lenders look at how much of a loan risk you are. Black marks on your credit are warning flags to lenders.
There are some jobs that are now pulling credit reports during the hiring process. Businesses want to know that they have employees that have good character. Your credit reflects your character and stability.
Debt collectors are not fun to deal with. They are charged with the task of tracking down and getting their money. This is how the debt collection companies make money so with their business on the line; they will pursue you with gusto. Avoiding having to deal with creditors is easy; pay your bills on time and never ignore them to the point they have to go to collections. Phone calls and letters from debt collectors are a sign of poor money management.
Gust Lenglet is the CEO of HBS Financial Group, Ltd., an accounting & tax preparation firm in Maryland. He has more than 25 years of experience in the banking and financial industry. Gust started his career as a loan officer at a major national bank, and then moved on to become controller of a multi-state law firm. In recent years, he has written many financial articles that have been published on Ezine Articles and many websites.