When you think of someone who has financial problems, chances are you think of someone who gets aggressive collection calls from creditors, skips monthly bill payments and doesn’t sleep due to the financial stress. While those are the most common warning signs, there are also less obvious signs that a money problem could be lurking. Recognizing you or someone you love may have a problem is the first step in finding a situation.
Living in Overdraft
If you spend more than what you deposit each month into your bank account, the bank will extend you a small overdraft privilege. Put simply, you live in a negative balance. This is debt and the bank will charge the regular monthly banking fees and also overdraft fees which can add up over time. The bank can also revoke the overdraft at any time. Being in overdraft month after month speaks volumes about your financial situation. If you spend more than you bring in, it’s important to consider why this is happening and can you fix it on your own. Perhaps you don’t make enough to cover your basic living expenses or are living well beyond your means. Both require changes to be made.
Debt problems can be subtle. They don’t always come on like a tsunami and often subconsciously go unnoticed. Maybe you have been thinking which bill you can avoid this month so you can use that money to pay something else. Maybe you make your visa minimum payment this month by taking a cash advance from another credit card. Maybe you ask family to help you “just this one time” but it starts to become a more regular occurrence. Paying part of a bill this month, only creates a bigger problem next month when the regular plus the missed bill and interest is added. The debt cycle of robbing from one to pay the other begins.
Avoiding Filing Taxes
It’s estimated, approximately 27 million people file taxes every year in Canada. Contrary to popular belief, not everyone gets a refund. All too often, especially with the introduction of the pandemic Federal Relief Programs, Canadians have drafted their taxes, found out they owed and avoided filing the return because they couldn’t pay it. Ignoring the problem will not make it go away. The law requires you to file every year that you have a filing requirement and The Canada Revenue Agency can hit you with civil and even criminal penalties for failing to file your return. The tax man will find you eventually.
While you may be able to keep your head above water when it comes to the bills, having absolutely no savings for emergencies is a telltale sign of problems. The series of unfortunate events happens to us all. Cars need repairs, appliances break, work hours get cut and illness happens. Without some kind of savings cushion, many resort to taking on more debt to cover emergencies which means higher debt payments each month.
Resorting to High Interest Lenders
When emergencies happen and there are no savings to help you through and no family/friends to assist, and you are refused loans by the traditional banks, too many Canadians apply for high interest pay day loans. Most who apply for these loans have already checked the 4 points mentioned earlier. These high interest loans are expected to be paid back within 2 weeks. They rarely do because in two weeks time your income doesn’t change, neither does your usual living expenses and yet you are suppose to have the extra money to pay back the loan. All that it’s done is kept the wolf away from the door for two weeks. Then another loan is taken out for another two weeks to pay for the first loan plus more interest/administration fees. Unless something dramatic happens like a bonus from work, the loan rarely gets paid and the payday loan cycle begins. This is a very big red flag.
If you or someone you love recognize any of these signs, we encourage you to get professional debt advice sooner rather than later for the money problems. When it come to debts, the early bird does catch the worm. Quick reactions can afford you a multitude of debt options while waiting to ask for help will limit your debt options.