Even if you're someone who loves all things financial and have always kept careful track of your own spending habits, have organized, updated financial records and simply love to create budgets and put them into action, the cost of living in various California regions is so high that even those who earn high incomes and typically keep their finances in check can run into serious trouble. You may, in fact, be surprised to learn how quickly your financial train can be thrown off track.
If you find yourself in the midst of financial crisis and things get out of hand, it's critical to know what types of options are available to restore financial stability. Since most finance problems are temporary, you'll want to know how to get back on path and lay the groundwork for a stronger financial future. Understanding the issues that often spark financial trouble can help you avoid similar problems down the line.
Credit card balances are key factors
Even if you use cash for most small purchases and do your best to keep up with your balances every month, many credit agreements work in such ways that if you get even a bit behind in your payments, your interest rates can soar. Several monthly rotations of this can land you in a heap of financial trouble that can be challenging to overcome.
The way you use credit cards is also important
It can be tempting to use credit as cash because it's convenient and it also allows you to make spontaneous purchases you might not otherwise be able to afford. Also, let's say you forgot to cash your pay check and need to pick up a few things on your way home. Swiping a credit card seems like a quick solution to a minor problem. However, if using credit as cash becomes a habit, it can lead to problems if you don't pay off your balances on time.
Income interruptions can have immediate impact
If you face an unexpected decrease or elimination of income, it won't take much to throw your finances out of whack. Perhaps your boss informed you that the company is cutting costs, so you will no longer receive monthly bonuses, or maybe your position was among the first to be cut altogether. Loss of income is one of the main causes of financial crisis in California and throughout the nation.
Were you faced with a medical emergency?
You may be the type of person who tries to set funds aside in case of emergency. That's a good habit; however, even at-the-ready nest eggs may not be enough to cover expenses and continue to make ends meet if you or a loved one is in a car accident or develops a health condition that requires surgery and long-term medical care. Many people use credit cards to pay medical bills, which often prompts financial trouble in the long run.
By taking advantage of financial recovery options available to you, you can satisfy your debt and create a new plan for restored financial stability in the future. Numerous types of bankruptcy exist that are often useful tools in such circumstances, and you may be eligible for one or more debt relief solutions.