Prescriptions for 5 Common Financial Ailments

by Gary Foreman

How healthy are your finances? See if you suffer from any of these common financial ailments and get the prescriptions to cure your money woes.

The last time I had a physical, I didn’t have any obvious health issues outside of being a little overweight and growing older.

I did, however, describe some minor symptoms to my doctor, which prompted him to order some tests. I was glad that he could read the symptoms and know what to test for. Fortunately, the tests found nothing seriously wrong.

Our finances are somewhat similar.

Often, everything looks healthy. We might have a slight concern about a symptom that we see. Yet we don’t know what it could be or what to do about it. Like with our physical health, we need a professional to help us read the financial symptoms.

So, let’s look at some financial symptoms and see what we learn from them.

Symptom #1: You’re Only Making Minimum Payments

Are you just making your monthly minimums without anything to spare? You’ll look healthy. No bill collectors will be calling. And your credit card companies won’t be raising your interest rates or hitting you with late fees.

But, if you’re just paying the minimum, you don’t have any margin for unexpected events. Just one new considerable expense (auto repair or appliance replacement) could raise the minimum over your ability to pay it. Or, any interruption in your income (a cutback in the number of hours) would put you over the edge.

Prescription #1: Find a way to pay down your credit cards to reduce your minimum payments.

Look for something in your budget you can cut for a while and use that money to pay the card with the highest interest rate. Or, if you can’t find anything to cut, look for some part-time income until you get the credit balances (and minimum payments) down.

Related: Paying Down Credit Card Debt Faster

Symptom #2: Your Car Loans Get Longer and Longer

Has each car loan been longer than the prior one? Yes, you’ll be stylin’ with your new wheels. Friends will ask how you like your new car. And, just like the salesman promised, you can afford the “easy monthly payments.”

The hidden danger is that you’re increasing the time that you’re “upside-down” in your loan. At some point in the future, you’ll be committed to two or three years of payments on a broken-down car that you can’t afford to repair or replace. (See 13 Questions To Determine If Your Car Is Worth Repairing.)

Prescription #2: Find a way to reduce the length of your auto loan.

That means prepaying some principal, preferably each month. Again, you’ll need to find some money from your current monthly budget or an additional source of income, but a minor inconvenience today can prevent a significant problem later.

Related: How To Never Have Another Car Payment

Symptom #3: You’re Not Saving for Retirement

Not able to put money away for your retirement? You really won’t notice it unless you spend some time studying your 401k and IRA statements.

Even though friends and family think you’re doing fine, time has a way of sneaking up on you. And, when it does, you’ll be happy to have some income besides Social Security. Failure to save now could mean a difficult retirement.

Prescription #3: Find a way to save at least a few dollars from every paycheck.

You may find that if the first “payment” you make each month is to your retirement account, you won’t be any tighter at the end of the month than you were before.

Related: How To Make ‘Pay Yourself First’ Work for You

Symptom #4: You Assume Job Security

Do you assume your job is secure? No one has been laid off. You’re still drawing a paycheck every week. And credit card companies are sending you invitations to apply for their card. So how bad can it be?

It might be worse than you think. If your company sales are just holding steady or decreasing, you could be in trouble. Or, if technology is gradually replacing your profession, it’s time to take action. Don’t wait until you’re told to clean out your desk.

Prescription #4: Prepare for a job loss before it happens.

Consider taking a job at another company. Or, if opportunities in your profession are limited, begin taking night classes now to learn new marketable skills.

Symptom #5: You Don’t Have an Emergency Fund

Are you struggling to build an emergency fund? Only you know that you don’t have any money saved for unexpected expenses. And, just as long as you don’t have an emergency, everything looks fine.

But when that unexpected bill comes due (and sooner or later, a car, appliance, or your home will need repair or replacement), you’ll be forced to borrow money to pay it. So, you’ll also be paying interest along with the emergency expense, making it even harder to save for the next unplanned expense.

Prescription #5: Plan for the unplanned expense. These expenses really aren’t that unexpected. You know that autos and appliances break. You just don’t know precisely when. So, include money in your monthly budget for those expenses. Put it in a savings account to be available when the “unexpected” bill comes in.

If you’re experiencing any of these financial symptoms, you might want to take a financial physical. Who knows? Perhaps you can avoid a long-term financial disability later!

Reviewed December 2023

About the Author

Gary Foreman is the former owner and editor of The Dollar Stretcher. He's the author of How to Conquer Debt No Matter How Much You Have and has been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com.