WATCH OUT FOR EARLY SIGNS OF BANKRUPTCY
If you are currently worried about your finances and uncertain if you are spending way beyond your earnings, these are some indicators that will serve as your guide.
Below threshold credit score Credit agencies help you monitor not just your payment history, but also your loan balances as well. These data are then compiled to generate your score, which will be used as basis for lenders to decide on whether to grant you a loan. A score of 600 and below is considered dangerous already. Rankings range from a low of 300 to a high of 850, so it is important to maintain yours either by paying down debt or applying for fewer credit cards.
Less than 5% savings If you want to secure your funds for retirement, stick to the ideal suggestion of advisers when it comes to saving. Set aside 10% of your gross income, since 5% is insufficient, and most likely will not cover you in case of an emergency. Meanwhile, if you save 10% of a yearly income of $100,000, your are bound to have around $900,000 by the time you want to settle down already.
Increasing card balances Avoid the habit of paying only the minimum balance of your monthly credit card charges and unsteady stick to spending only what you are certain you can repay. The importance of on time payments can never be neglected, especially because a $5,000 worth of debt might surprise you in the long run if you keep on providing a compensation of just $200 a month.
Excessive house expenses If more than 28% of your salary goes to mortgage or property, then this is a sign that you are living beyond your means. This percentage serves as a threshold set by most lenders for a person to be able to complete their mortgage fees and still enjoy a comfortable lifestyle. Sometimes, people are able to still spend a lot for their homes given that they cut back on other expenditures but according to experts, this is an uncertain line to walk on.
Bills everywhere! Many have fallen into the trap of purchasing unnecessary things and paying through installment because this practice seems very convenient. However, you are depriving yourself of future savings with this habit, and sometimes, your bills tend to add up. Before you know it, you are already spiraling down into bankruptcy. Try to assess your monthly bills and decide where you can reduce your expenses. Ask yourself, do you really need a new TV? Even the simple measures of lessening your meals outside will go a long way and save you from drowning in your own debt in the future.
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