“Before I went bankrupt, everything went its way” – people often defend themselves. At the same time, we can observe 5 common traits in the lives of almost every slope, all of which preceded the fall. Because, like the financial upturn, financial sinking (going bankrupt) has its antecedents! Now we’re going to queue them. If you know yourself, think about your life immediately before it’s too late!
The nature of bankruptcy may be material or non-material in nature. In this article we talk about financial bankruptcy, which does not necessarily mean a complete collapse. Many would go bankrupt if they could not continue their quality of life tomorrow…
# 6 You can’t pay your entire credit line
The credit card and overdraft facility in a financially advanced culture is not so devilish, as they know that by using wisely (fully repaying the loan every month) we can make an expansion in the family budget free of charge (we can use the bank money for free). However, this system is very delicate and works only if we can repay our entire credit line every month without any hassle and we can get out of it at any time.
The bank is not a very unselfish institution and it is not free to give your money to your personal financial expansion. In this case, the bank makes an option (giving you credit for honeysuckle) that the majority (you form a risk community with others) slips with repayment within 30/45 days. And if you can repay less than 1 HUF, you will be charged the full interest for a given period.
It’s enough to slip once with full repayment and you’ll find yourself paying 5-10-15 thousand forints every month. In this case, the bank won and replaced its own option, which was tied to your loss!
# 5 You go to the movies with two more
I know it sounds very surprising, but it is basically true that on the slope you can start “two more cinema”. Of course, replace the cinema with anything else that brings you joy and costs money. The point is that it is very easy to catch ourselves with bagatel items, like say two more movies this month.
But what about “two more”? That’s exactly what the internal financial alarm does not yet indicate, which you do not feel any negative strange feeling (guilt) in yourself. Or when you’re not asking yourself, “Don’t we go to the movie lately?” Believe that this internal financial alarm system exists, many people simply ignore it. However, it goes to a lot of small ones and you just “slip” with one month’s salary…
# 4 Every year you buy the latest “iPhone” – You’re going to go bankrupt
Many people do not realize that the improvement of perceived wealth and quality of life is actually the beginning of a paved road to personal bankruptcy. Not sure we live better, we are richer, because now we can follow the trend every year and we can buy the latest “iPhone Xt” with the sale of the iPhone 7 with the payment of 100-150-200 thousand HUF. This means one thing:
- in the best case, we had so much liquid capital to pay for the change
- in the worst case, we don’t have enough money to switch, so we ask for a installment payment
It has to be understood that no matter what our financial situation, the rarest cases (when our material or professional benefit comes from switching), nothing else happens, as we get over the mainstream train and become a very expensive ticket we pay for our savings. So any such investment means reducing our savings, our actual wealth in exchange for a perceived advantage that adds nothing to our lives as momentary emotional doping, a sort of satisfaction that “we can afford it …”
# 3 You have to reach the “6 Months Savings”
I can’t decide which of the financial psychology is worse. If you do not yet have 6 months of savings, then have you finally reached, and then you come to get someone to give you a birthday or Christmas gift? The 6-month liquid savings mean you have a medium-strength financial backstop that will keep you stable for 6 months even if you can’t earn money!
Everybody would need this backland. In contrast, statistics show that the average Hungarian worker does not have enough liquid savings for 1 month of living! What does that mean? Half the country dances on the edge and prays that no event (accident, job loss, etc.) should happen, because then the entire family budget was overwhelmed.
If you managed to collect this liquid capital,
the most dangerous thing you can get away with is when you touch and waste on something that doesn’t really matter to your life. A lot of people went into bankruptcy with this simple and harmless step. Think about it! You’ll lose 3 months from 6 months (say to a new phone) and suddenly something happens to you. In this case, you will not be able to recharge your credit line after a while and the risk of the first point, the interest payment, will come into effect. You’re going to borrow a loan from your credit for a circular trap that you may never be able to see!
# 2 You’ve been looking for the same for years
There is no stagnation in finance. You’re in an eternal motion if you want it, if you don’t deal with it. Either up or down your path. People with average financial culture often find it extremely cost-effective, but they are getting more and more difficult every year! What is the reason for not spending anything unnecessarily?
We are usually advised to either reduce your expenses or increase your earnings. However, they both have their own physical limit. If you realize that you have been looking for roughly the same number of years, then you have to think strongly about doing something wrong or simply having fun in your own life!
Finding the same amount each year also means spending more and more every year.
Don’t forget that there is a so-called consumer basket (a collection of food and drinks that symbolize your livelihood), which costs you a unit of money each year. Prices are always rising (what we can call inflation and / or market margins) and adapt to income conditions. If everyone around you is looking for more, it will surely be visible on prices. If you stagnate in this, your livelihood will become more and more expensive year by year, in other words, in practice your pay will actually decrease year by year!
What a craze is that you are getting more and more routine-better in your work year by year, becoming a more valuable workforce and inversely looking for less and less than the present value. It’s time to look for a new job, where they are more appreciated!
# 1 Your loan balance is higher than 35% of your income
It is worth finding the ideal balance. Prior to the 2008 global economic crisis and the loss of banking confidence in Hungary, the biggest mistake was made in Hungary and financial institutions overwhelming people in disrupting the ideal unity. It was not uncommon to charge 50-60-70% of the certified income with monthly installments, which was no longer a delicate balance but a net stupidity.
It is difficult to find an ideal ratio, because every life situation is different. However, I think that at 35-40%, we should never exceed our monthly incomes on a monthly basis. It’s simple math. You can’t show me a man whose loans have been ruined by up to 35% of your regular income. But we can shut down the Good with those who have not left any room for maneuver!
If you have too much loan repayment compared to your income, it means you bankrupt yourself, but have not yet spoken about it. You live in a bigger house, drive a better car, buy more expensive kayaks than you can afford. You have become a slave to your own desires, which you will never get rid of unless you change your attitude immediately!