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At What Point Should You Freak Out About Money?

Warning signs and tips on how to stay afloat financially.

by Taylor Hartman
May 11, 2020 | Money

Nearly half of Americans say high costs are a major threat to their financial security. Pair that with lower wages, student debt, medical bills and more, and chances are at some point in our lives, we will feel a financial burden, which can cause panic. 

But when do you freak out for real? At what point should you be concerned about your financial stability?

Here are some things to look out for, common missteps, and what you can do to avoid personal financial collapse. 

Watch for the warning signs

How can you know if your current cash flow is sustainable? Put simply, over time you want to be spending less money than you are taking in.

Savings accounts and "rainy day funds" are vital necessities for adults in today's world. However, many people have a hard time saving money if their debt and bills are too high, or if they're spending frivolously.

Illustration of a man who smashed a savings piggy bank with a hammer. Rewire PBS Money
It's time to reassess your finances if you find you keep dipping into your savings.  |  Credit: Adobe

If you're tapping into your savings regularly, or you're paying for things you can't afford on a credit card, it may be time to freak out, or seriously look at your finances.

Jordan R. Hadfield, a private wealth consultant in Salt Lake City, says if your debt is going up or your savings are getting drained, the situation can become dire quickly. 

"The most obvious sign that a financial situation is not viable is increasing debt or decreasing savings account balances," Hadfield said. "They are evidence that current spending is higher than current income, which is unsustainable."

Hadfield says that in the long term if one isn't accumulating more wealth or investments, a financial situation also may not be sustainable, though it may seem okay in the short term. 

"As we age, our savings and investment accounts need to be increasing in value," Hadfield said. "If we are not making regular contributions to these accounts, we may be moving backwards without even realizing it."

David Craiger is in his mid-twenties with an undergraduate degree. After school, he bought a new car so he could commute to an entry-level job in marketing, his desired career field. After a few months of working, Craiger found himself pulling $100-$150 out of his savings account to make his student loan payments. 

"After a couple of months there was a huge dent in my savings," Craiger said. "I got used to pulling from the account, which I didn't like." 

Craiger downloaded a budget app to his phone and started logging his purchases. After gaining insight into his spending, he was able to look at his habits and make cuts where he could. 

"I stopped getting lunch near my work, which helped save money," he said. "I got different car insurance too, which put me back on budget.

"I'm not saving a ton right now and my loan payments are still there, but I'm not pulling any money out, which is huge for me." 

Stumbling blindly through bank balances 

A common mistake people make when it comes to financial situations is a lack of budget, or no knowledge of what is being spent on a monthly — or even weekly — basis.

Jacob Smith is an accountant in Salt Lake City. Last year he bought a house but still didn't track his spending like he felt he should. 

"I had a general budget for my mortgage and other debt," but beyond that, I was just kind of riding paychecks," Smith said.

It took an article much like this one on responsible spending for Smith to realize that he needed to get a tighter grip on his spending habits. 

"I'm the type of guy who gets coffee every single day before work," Smith said.

"Once I started looking at my bank account and seeing all those charges, I was able to make a change. I buy coffee for home now. It's not as good and I kind of hate it sometimes, but I save a ton of cash." 

Once knowledge of spending is reached and a savings account is growing, experts say it's wise to look into investing excess cash.

Sam Watkins is the chief investment officer at TrueNorth Wealth. He says that a common mistake he sees young people make is stacking money in a savings account, rather than making long-term investments. 

"Holding cash far beyond what is prudent is common," Watkins said.

"Money held in cash equivalents has not kept up with inflation for many years now, and the opportunity cost of not investing excess cash is eye-popping over long periods. Most people have too little life, auto, and disability insurance.

"Too many people use credit cards, auto loans, HELOCs (Home Equity Line of Credit) and other forms of debt to live beyond their means.

"In all these scenarios, a lack of planning results in missteps that can have large negative impacts in the long-run," he said.

Staying on budget 

Even with the best financial planning and budgeting, sometimes we get off-track, blindsided by emergency bills, or the occasional "treat yourself" buy.

Experts like Hadfield say that though these things happen, it's important to try and avoid spending beyond your means. 

"If you find yourself in a difficult financial situation, it is important to remember that it can be remedied, regardless of how bad it appears,"Hadfield said.


"Know that small changes can have a large impact over time and that financial freedom is always attainable. Please do not put off addressing the situation and don’t ever give up."

Hadfield suggests creating a reasonable financial situation to get back on track.

You don't have to save $10,000 in three months. Taking small steps and using simple budgeting tools can make a big difference in correcting bad spending habits.

Hadfield suggested to do the following if budgeting doesn't seem to be working: 

  • "Cut up all credit cards and use cash for purchases. You should also call the credit card companies and ask them to lower their interest rate. Some companies will do this on occasion, but you must request it.  
  • "Budget weekly by dividing allotted monthly income into four separate envelopes, one for each week. You can’t overspend if you don’t have the cash. This is known as the envelope system and can be very helpful in controlling spending.
  • "Prioritize debts by interest rate. Make the minimum payment on all debts and put any extra money towards the debt with the highest interest rate. This way, you are paying off the most expensive debt first.
  • "Sell personal items that you can live without. Use this extra income to pay off debts more quickly. The faster you can get out of debt, the sooner you’ll reach financial freedom. Yard sales, online auctions, or social media sites are great places to sell personal belongings. You may be surprised how much money you can create by selling things you don’t need."

Claire Carlyle is an administrative assistant who moved from Denver to Dallas in 2014.

When she moved, she quickly racked up credit card debt buying new furniture, pots and pans, and a TV for her new apartment. On top of that, Carlyle's rent was considerably higher when compared to where she was living before.

Before Carlyle knew it, she said her credit card payments and interest were jaw-dropping, and she could barely make rent and stay on top of bills. 

"I calculated the interest I was paying and I thought, 'Wow, that's so much money I could have saved,'" Carlyle said. 

After looking into her debt a bit, Carlyle decided to transfer her credit card balances to one account, where the interest was slightly lower. She says she still hates paying her credit card bills monthly but has learned to relax a bit and work on small changes over time. 

"Money is money," she said. "I can't go back and fix the bad choices I made. What I can do is work on what's right in front of me and make sure I don't make those choices again.

"I used to freak out a ton about money. Now I just budget, spend less and trust the process. That causes a lot less stress for me in the long run."

Taylor Hartman
Taylor Hartman is a writer from Salt Lake City. He works at KUED, Utah’s PBS station. He loves the outdoors and discovering and writing new stories.
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