Next video:
Loading the player...

Almost everyone at some point carries a credit card balance or misses a bill payment. But how do you know when the sum of those lapses has left you on financial thin ice? These four signs can help you spot danger ahead.

Number 1, you have no emergency savings. Having no cash stashed for a medical emergency or a car accident may force you to borrow just to cover your basic financial obligations, like rent and food. Research has shown 24% of Americans have more credit card debt than emergency savings, and 28% have no savings at all. Put away at least six months of living expenses, just in case.

2, you took out a payday loan. These short-term loans are a bad idea. If you annualize the interest and fees that come with such loans, the annual rate ranges from 400 to 500%. Bank or credit card loans are better options.

3, you’re only making the minimum monthly payments on your debts. Lenders keep minimum monthly requirements low in the hopes your balance will pile up interest. For example, consider a credit card with a $1,000 balance, an 18% annual interest rate, and a minimum monthly payment of interest plus 1% of the balance. If you just pay the minimum, it will take you 113 months and $923 in interest to pay it off.

And 4, you stopped saving for retirement. After meeting your daily obligations, put what you can in your retirement fund. That gives your money time to grow so you can enjoy your golden years.

  1. No results found.
Related Articles
  1. Personal Finance

    Why Making Minimum Payments Gets You Nowhere

    Getting out of debt can be difficult, but paying off a minimum balance each month only makes things worse.
  2. Investing

    10 Ways To Prepare For A Personal Financial Crisis

    Life is unpredictable, but if there's anything you can do to stave off disaster, it's to be prepared and be careful.
  3. Personal Finance

    How Credit Cards Affect Your Credit Rating

    The average American household has four cards, but does that mean more is better?
  4. Personal Finance

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
  5. Personal Finance

    The Pros And Cons Of Balance Transfers

    Do the math before you assume that transferring your credit card balance to a lower rate card will save money. It could – or it could cost you.
  6. Personal Finance

    Are You Spending Too Much?

    Post-holiday credit card bills are just one signal that it's time to cut back on spending. Here are others.
  7. Personal Finance

    9 Signs You Can't Afford Your Mortgage

    These indicators show that your financial situation isn't as stable as it could be.
  8. Personal Finance

    The 7 Best Ways to Get Out of Debt

    Obtain information on how to put together and execute a plan to get out of debt, including the various steps and methods people use to become debt-free.
  9. Investing

    7 Ways To Consolidate Debt

    Different loan sources to use when you consolidate debt.
Hot Definitions
  1. Restricted Stock Unit

    Compensation offered by an employer to an employee in the form of company stock. The employee does not receive the stock ...
  2. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  3. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  4. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  5. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center