5 Practical Tips For Avoiding Financial Ruin

While the title of this post might seem like fear-mongering clickbait, my “5 Practical Tips For Avoiding Financial Ruin” are based on real-life banking problems you might find yourself dealing with someday. Follow these suggestions and you can save yourself a lot of heartache.

I promise you, there is nothing you need to buy. Any resources cited are readily available to you via the banking services that you’re already using and/or your computer/tablet/mobile. Your economic status doesn’t matter, either, as these suggestions are just as important whether you’re financially secure or if you struggle month to month to pay your bills. Any hiccup with your banking can be detrimental not only to your ability to pay your bills and to your credit score, but to your mental well-being as well.

Before I get to the tips for avoiding financial ruin, I’d like to offer some background so you’ll better understand how I came to write on this topic. Regular readers of this blog know that I’m neither an accountant nor an investment advisor nor do I have a background in banking or cyber security. I’m simply someone who wants to pass along some ideas on smart ways that you can protect your interests and sanity. Of course, I encourage you to assess for yourself as to whether these tips would be truly useful to you and apply them as appropriate to your circumstances.

The genesis of this topic comes from the vast number of articles and posts related to finances and investments that have been popping up in my feeds more and more in the past few weeks now that “tax season” is in full swing. Along with those, there have also been a couple of cautionary tales circulating around about and/or by people who have run into challenges with their banking institutions. In reading/hearing their tales, my initial reaction is often concern that the same problem could happen to me. Upon further reflection, I will then start to think of how I might go about preventing that problem altogether.

When The Husband and I married, neither of us had much in the way of any financial assets and our incomes were roughly the same. Both sets of our parents had successfully lived with a “what’s mine is yours and what’s yours is mine” approach to money in their respective marriages so it seemed natural to do the same. Everything pooled into one pot. I added The Husband to my checking/saving accounts (I was banking with an employer credit union which offered a lot of advantages) and the accounts he had had at a regular bank were closed. New accounts/loans/LOCS were opened as joint ones and we took steps to add the other to pre-existing department store credit cards and others. We established early on that  I’d be the one to do the heavy lifting when it came to tracking our finances and paying bills.

This co-mingling of finances didn’t give either of us any more or less authority over the other as to how our monies were to be spent. Together we established (and periodically reviewed) what our budget was/would be based on expected costs and future goals. Major expenditures were made by mutual decision. However, it did seem best to have one of us designated to keep track of our financial transactions, register balances, make payments, etc. I took on that task since I’m a bit of a left-brain analytic numbers nerd.

Throughout this 30+ years of experience, I’ve gained a lot of insight, figured out some time savers, and learned that there’s always more to learn. Technology has changed the way we as a society handle our money and the internet is both wonderous and terrifying when it comes to banking and making financial transactions. Remember the days of reviewing a paper statement and reconciling the transactions you had recorded in your checkbook register by hand? What about double-checking the charges on your credit card statements? I do, painfully. Nowadays, I use a basic personal finance management software program to record, capture, and reconcile the transactions for all of our accounts which can bring its own set of challenges.

Even so, you now have a better understanding as to why I’m writing on this topic. Typical articles on this subject will include recommendations for budgeting, having an emergency fund, living below your means, and so forth. While my tips offer no budgeting or money management advice, I do think that you’ll find these practical ways for avoiding financial ruin quite useful.

Tip #1 – Organize, Organize, Organize

No matter the method, figuring out a plan for staying on top of your finances is one of the key means for avoiding the negative impacts of missed payments. Trust me, as well as countless other experts in the field of organization, when I tell you that this is the ultimate preventative step in keeping important tasks from falling through the cracks. Relying solely on a stack of paper statements or flagged emails to act as your reminders is fraught with peril.

A plan doesn’t need to be overly complicated, start with what, when, and how. For the “what”, make a comprehensive checklist of all open accounts (mortgage/rent, utilities, loans, insurance, credit cards, etc) whether or not they have an outstanding balance. This list can be on paper, in a notes app, on a spreadsheet, or other document … your choice. Next to each account, add the day of the month the payment is due or typically due for accounts with a zero balance. For accounts like insurance or property taxes that are paid annually or semi-annually, you should note the month as well as the day. You can group the accounts by type or sort by due date, the choice is yours. Now you’ve got the “when” covered. Lastly for “how”, determine by what means each payment will be made (e.g. online account, Bill Pay, send a check, etc) which then further groups the accounts and sets up your action plan.

I maintain a Word document on which I’ve also included login/password information for each account. This document started as my way of keeping track of logins/passwords and eventually morphed into my financial tracking plan as well. In addition to that document, I have a browser folder labeled “Monthly Bills” where I have bookmarks for the related customer login pages for each entity. This makes logging into those accounts go a lot smoother and serves as a secondary accounts checklist.

Tip #2 – Use accounts apps and alert settings

It’s a digital world now so use the tools available to help you stay on top of your finances. Make it a habit to access your account information regularly (daily, weekly) and set notifications as appropriate. Notifications can be used to monitor spending, raise awareness of unauthorized activity, and remind you that upcoming payments are due. The point here is you can’t go wrong by checking and then double-checking.

Tip #3 – Don’t Just “Set it and Forget it”

One of the cautionary tales I alluded to previously was shared not long ago on social media (I saw it on TikTok). A woman had set up some electronic payments to be sent by her bank only to receive a past-due notice from one of the accounts when the payment was not made as scheduled. She came to find that the money for several missing payments had been deducted from her account anyway despite the electronic transfers having not gone through. In the end, this woman was able to cover the missed payments, but she still spent endless hours trying to get her funds returned to her without the 7-10 day wait that the bank’s customer service had initially quoted her.

While a frustrating problem for that woman, a single instance of delayed payments isn’t likely going to cause anyone financial ruin but there is still a lesson to be learned. I also pay all our bills through one or another electronic means. When scheduling a future payment through a website, I will flag the confirmation email as a verification double-check for my plan. If I send a payment from my bank using Bill Pay, I monitor the payment activity log during my periodic account logins. While it may sound a little obsessive, these double checks take very little time to do and provide peace of mind that nothing has been overlooked or gone amiss.

This even applies to recurring payments to ensure that an unexpected glitch hasn’t wiped out previously scheduled payment(s) or that the timing of a payment hasn’t gone awry because of a holiday or the due date falls on a weekend. It’s your responsibility to make sure you have the funds in place for payments as well as to make sure that those payments are made even if by a third-party service.

Tip #4 – Stop writing checks

The other cautionary tale I recently read was about a woman whose bank account had been frozen which in turn caused a check she had written to not be cashed. This had occurred because she made an inquiry to her bank by phone about another check she had written a few months before. This inquiry sounded suspicious to the bank clerk handling the call who in turn hung up on the woman and put a freeze on the woman’s account. There’s a lot more to the story but it took over a year for the problem to get straightened out.

Oh, what a hassle that woman went through. But as I read the story, two aspects of it stood out to me. The first is that the dust-up might have been avoided if only she had used her bank’s app to access her account information to determine that check number on her own (see Tip #2 above). And the second one, why was she still writing checks?

Paying with a handwritten check, I suppose, is mostly a boomer thing nowadays. And yes, based on the photo that accompanied the article, the woman is definitely in my age bracket. However, it’s only on a rare occasion that The Husband or I pay for something with a check that either of us has written ourselves. We even switched over to Venmo to pay our housecleaner. Nearly all of our bills are paid online, and in-person purchases are either by credit card (with balances paid in full each month), by debit, or by cash (which is not often). Not long ago I saw someone paying for groceries with a check and I remember thinking “WTF”.
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Tip #5 – do not respond directly to texts, emails, or phone calls

Last but not least, it seems that not a day goes by that I don’t come across another tale of someone getting scammed out of a significant amount of money. Young and old alike can be convinced by a scammer that something is afoot with one of their accounts, or that there’s an investment opportunity that will make them a lot of money, or that a relative needs to borrow money urgently to resolve a problem. The common denominator in nearly all of these rouses is that the scammer made first contact either by text, email, or most likely a phone call.

Many times these initial contacts are disguised as being from a legitimate source. The text/email/call will appear to come from the agency or institution as identified but you should always be wary, especially if you are urged to act quickly. Never respond directly using any links provided in a text or email and never divulge any personal information if you are contacted by phone. Initiate your own contact to follow up on those inquiries using the website login you normally would use for that account or if you prefer/need to speak to someone directly, look up the appropriate number to call yourself.

And you know all those junk/spam/robo calls you get? On your mobile phone (because who has a landline anymore these days?), you can use a detection filter or an app setting to send unknown callers directly to voicemail. Calls from someone in your contacts will still ring through and any other legitimate caller will leave a message. I get dozens of spam and caller-not-known-to-me calls daily but they all go straight to voicemail. Heck, even some of my family members think I never answer my phone. For those of you who still have landlines, it’s the same advice. Use your caller ID and don’t answer calls from unknown numbers.

The observant among you may have noticed that my look in these photos is yet another based on my preferred formula of floral skirt/dress, jacket with pattern/texture/design, and walkable footwear. The jacket was a thrift store find I made some time ago but had yet to wear. I had wanted to wear this floral dress (retail purchase last Fall) that I’d also not worn before and as I was considering my options for my outer layer, the twinkle of rhinestones across the shoulders of this jacket caught my eye. Decision made. My boots were also a secondhand purchase made via Poshmark.

Let’s Wrap This Up

Now, onto the Fine-Whatever link-up. Contributed by Wendy over at The Inspired Eater, the featured post from the last link-up is How to Have Your Own Back As You Lose & Preserve. In keeping with the theme of offering 5 tips for avoiding ruin, Wendy posts 5 pearls of wisdom every week about losing weight and gaining a more sustainable approach to weight maintenance.

The 5 practical tips for avoiding financial ruin shared in this post are hardly exhaustive. Staying on top of your personal finances requires careful planning, discipline, and making informed decisions. My parting advice to you is to be alert,  be suspicious, and be cautious when it comes to making the most of your money.

Stay well and let’s keep in touch! Subscribe, tweet, follow, friend, pin … all options are available. I look forward to hearing from you soon.

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Note: This is an unsponsored post; however, some or all of the links to clothing items are associated with an affiliate program where I earned a few cents for each click.

Photo credit: MMPerez