According to estimates by the Bureau of Labor Statistics, around 47 percent of people live paycheck to paycheck. And while that works for people in permanent employment who believe that at some point in the future they will get a raise, other people slowly descend into debt.
Many people say that money concerns are what keep them up at night. But how do you know if you really are getting into trouble?
Here are some telltale signs that you can’t afford your mortgage.
If you find that you’re always paying late fees because you can’t afford to pay a mortgage, then it might be time to reevaluate your budget. An imbalance in what you’re paying out and what you’re getting isn’t only stressful, it can also lead to a worsening of your credit score if left unattended. Increases in your credit score can then result in further increases in interest rates charged by your creditors who will mercilessly increase interest payments if they suspect that you’re unable to pay.
No Emergency Savings
If you’re thinking about how to stop foreclosure, one way is to have enough savings for a rainy day. But many people who can’t afford their mortgages don’t have any savings in the bank. Inc magazine recommends that people have at least one month’s spare cash in the bank, just in case of a financial emergency. If you don’t have this much money, then they suggest that you reevaluate your household budget.
You’re Dipping Into Your Retirement Fund
Some people run so short of money that they feel compelled to dip into their retirement savings account. Often it’s their only option to pay off debts or make mortgage repayments. If you find yourself doing this, then there’s a good chance that you’re spending too much money on stuff you don’t need, or you’ve bought a house with an unaffordable mortgage.
Making Small Payments On Your Credit Cards
Most people know that in order to remain in good stead with credit card companies, it’s important to make regular and significant payments on your credit card bill. Only making the minimum payment every month is a sure sign of distress, indicating that you’re probably carrying too much debt.
Take a look at your mortgage payments and other debts and find a way to get back on track. Remember, only paying the minimum amount on your credit cards will increase the time horizon over which your debt as to be paid, meaning you’ll be paying it off for longer and handing over more interest to the bank.
Your Income Is Down
If you’ve been demoted, put on part time, or laid off altogether, there’s a good chance that you’ll no longer be able to pay your mortgage installments. Even a small reduction in income, according to Inc magazine, can be a disaster. They recommend that people look for a second job or a new job to make sure that their income and their expenditures are balanced. At the same time, they should move to start slashing their budgets and getting out of debt.