5 of Worst Money Problems to Have

In a perfect world, our cash would flow smoothly from year to year with no major incidents. Unfortunately, life can’t always be perfect. Sometimes we cause our own money problems through overspending or other bad decisions. Other times, money problems are unexpected, caused by situations outside our control. Here are some of the worst money problems to have and tips for dealing with them.

Not having enough money for a major expense. Emergency expenses, like a major car repair, medical bill, or appliance replacement, always seem to come when you least expect them. Without savings or access to credit, figuring out how to deal with emergency expenses can be stressful. Because you know emergency expenses will come up at some point, it’s a good idea to build up a rainy day fund so you can deal with unexpected expenses with ease.

Getting an unexpected tax bill. Finding out you owe Uncle Sam or your state revenue department can be scary, especially if you don’t have the money to pay off the tax bill right away. Fortunately, you may be able to work out an installment arrangement making monthly payments on your balance until it’s paid off.

Don’t ignore an outstanding tax bill. You may have your wages garnished, bank account levied, or assets seized to satisfy the debt. You can avoid a tax bill by adjusting your tax withholding or increasing your quarterly estimated tax payments.

Carrying too much debt. Having too much debt can affect your life in more ways than you may realize. Monthly debt payments take up a large portion of your monthly income making it difficult to save money and afford your other monthly expenses. As your debt level rises, creditors and lenders are less willing to lend to you which makes getting a mortgage or auto loan more difficult. Minimize your borrowing to prevent debt. If you're already in debt, start working on a repayment plan so you can bring your debt levels down.

Running out of money before the next payday. Living paycheck to paycheck is tough enough, but going through your wages well before payday comes can be a nightmare. Make sure you’re spending your income wisely by using a budget to plan and manage your expenses. Changing some of your bill due dates can help, particularly if most your bills are currently paid from one paycheck. Putting money into savings can give you a cushion to lean on if your expenses are higher than normal one month.

Losing money in an investment. We invest money to make money, so finding out you’ve lost a significant portion of your investment can be a huge problem. Depending on the type of investment, you may be able to recover some of your lost funds. For example, if you've experience a short-term loss in the stock market, your investment may rebound after a period of time. Consult with a financial advisor and do your own research to be sure you're making the best investment decisions.

While you can't prevent all money problems, you can prepare for them. Making educated financial decisions, adopting good spending habits, and building a healthy savings are three of the most important things to soften the blow of money problems.