four money warning signs

First Person: Am I Headed for Financial Ruin?

Buying groceries on credit
If you don't have enough money in your checking account to purchase food and have to use credit, then you are in financial trouble. If you just use a credit card because it's convenient, and then pay it off, that's a different situation. I knew I had trouble when I used credit cards for pizza delivery instead of being able to pull out a $20. To avoid bankruptcy, start working on a cash-only basis for a while. Make a special envelope for food money. Clip coupons as well, or share extreme couponing tips with friends.
Making less income than housing expenses
If you don't have enough income coming in to pay your rent or mortgage and utilities, consider that a sign of financial desperation. Find other ways to make extra income. Mow lawns for neighbors if you have to. Consider renting a less expensive apartment. If you own a home, refinance or opt for a short sale so that you can downsize to a more affordable living situation. Otherwise, you will face foreclosure.
Not being able to pay credit card minimum
When your minimum payment becomes so high that you can't afford to pay it, you need to consider your options. Credit cards are unsecured debt, which means some people have no problem walking away from the bills. It's better to take responsibility and pay off your credit cards with the debt snowball plan. To avoid bankruptcy, you need to find a way to pay the minimum payments, or call the credit card companies to work out a temporary solution.
Being overdrawn on your checking account
Some banks will allow you to be overdrawn on your checking account up to a certain amount. But being overdrawn is always a red flag that you are not living within your means. Make a commitment to have at least $500 in your checking account as a cushion. Start making sacrifices each day to save money. It's fine to think about your monthly bills and budget, but I had to start looking at my finances daily to really reach my final, debt-free destination.
To avoid bankruptcy and prevent foreclosure on your home, make financial sacrifices early and often. Don't wait until you see the signs of financial desperation. I have a friend who is renting out a room to ease her financial burdens. A relative is renting out his Florida winter home. There's no shame in becoming a multigenerational household to save money on living expenses. It’s easier to navigate around financial potholes than to get out once you’re stuck.