Early warning signs of financial problems

There are some indicators of financial difficulties that can be observed prior to the situation deteriorating.


Have you recently noticed that something is wrong with your finances? Do you have the impression that your paycheck disappears before you know it? If so, it is probably time to take action and have a hard look at your financial situation. Here are some pointers to help you do that.

Indicators of financial problems

First and foremost, here are some signs that, while not necessarily indicating imminent danger, should serve as warning signs of a possible financial decline:

  • You have no idea of how much you owe.
  • You rely on credit cards to make ends meet.
  • Every month, you struggle to pay bills and meet obligations.
  • You can only afford to make the minimum payments on your credit cards.
  • You occasionally pay your rent or mortgage late.
  • You find it difficult to set aside money for yourself or your children’s future.

Of course, there are more obvious warning signs, such as calls from creditors for non-payment or the refusal of a loan.

Ignoring these signals is the worst thing you can do because financial problems usually do not resolve themselves. It’s essential to take them head on and to take steps to restore your financial health. Just as an illness is more likely to heal when treated promptly, responding promptly to financial difficulties will minimize the impacts.

When is debt at a point of no return?

Debt reaches a point of no return when its repayment consumes too much of your budget, to the extent that you can no longer afford essential expenses (food, children’s activities, rent, etc.) without resorting to credit cards. You become trapped in a cycle of debt where simply cutting expenses often isn’t enough. We encourage you to quickly diagnose your finances to detect early signs of excessive debt.

If you identify signs of financial problems, we recommend taking action now by asking questions to a professional or booking an informative meeting to analyze and improve your current financial situation.

What to do If debt worries you?

If your debt load worries you, follow these steps to improve your financial situation:

  1. Identify all your debts, indicating the amount owed, monthly payment, and interest rate for each.
  2. Establish a budget to determine your monthly living expenses.
  3. Calculate your debt level using the debt ratio tool.
  4. Contact your creditor if you need time or can’t make a full payment to explain the situation and try to negotiate a grace period or partial payment.
  5. Don’t underestimate small debts, as even modest amounts can negatively affect your credit history.
  6. Seek advice from your financial institution, financial planner, or a personal finance advisor at Jean Fortin.

If you have debt problems, it is best to have a very good understanding of your financial situation in order to explore all available options.

What to avoid if you’re in debt?

Finally, here are things you should avoid at all cost:

  • Neglecting rent or mortgage payments.
  • Ignoring mail or failing to respond to creditors.
  • Believing that if a creditor stops contacting you, they’ve “forgotten” about you.
  • Resorting to offers of quick-fix loans that have very high interest rates, as this will only worsen the situation.

We hope this article helps you recognize and overcome the stress and anxiety associated with financial difficulties. Having a better understanding of your financial situation is a 1st step toward debt resolution. For any questions regarding your finances, our advisors can assist you in finding solutions. Consultations can be conducted remotely or in person, according to your preference. It’s free, confidential, and without obligation.

By Pierre Fortin
Jean Fortin & Associés
Personal Finance Advisor
Licensed Insolvency Trustee