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Many people associate the onset of financial problems with a big event.

A job loss.  A major health issue.  A catastrophe.

These are all major events and could very well lead to financial troubles.  However, it's not just the major things you have to watch out for and prevent against.

In fact, it's quite the opposite.  I'm guessing that a majority of people in financial trouble got that way without having any major things.  Instead, it was just a culmination of little things that added up without them knowing.

My Work Computer

Let me use my work laptop as an example.

I started here in 2006 and was granted a brand new laptop.  As with all computers, it worked great but within a few years was showing it's age.  It had gone through a couple of batteries, it was getting slower, had a cracked edge around the outside of the case, and just other general problems that come about from a device that's used all the time.

So, I was pretty happy when they replaced it with a brand new laptop last summer.  Just as with the first one it was great.  It booted up in no time, it ran fast, it had better applications, and was overall much better.

After awhile, it didn't boot up just as fast, but I figure that's normal.  As you install more programs, it inevitably slows the system down a degree or two.

Closing down applications sometimes led to an error message.

One day, Firefox went to do an upgrade and although everything went well during the process, the program crashed upon start.  I found a workaround that involved going back a few versions.  Not ideal, but it worked.

Then, applications started taking more memory than they should.  I am pretty savvy so when I see Excel and Firefox taking hundreds of megabytes of memory every couple of hours, I knew something was wrong.

Eventually, I hit my limit.  I put a work order in to get the thing re-imaged.  I actually probably waited too long simply out of embarrassment, since I'm an IT guy and prided myself on always keeping my computers clean.

Turned out, it wasn't anything I had done.  The stupid machine had a bad hard drive.  They always run a diagnostic check, and the hard drive failed.  They replaced it and put a new image on and it worked great.

Back to the point

This leads me back to the point and back into the financial trouble discussion I started with.

See, I let things progress and get to the point where the computer was unusable, simply because everything that happened was small.  If the thing had refused to power on or boot up or done a more recognizable ‘crash', it would have been addressed and fixed a lot sooner.

That can be the same pattern when it comes to getting into financial trouble.

If you get fired and lose all your income, you can pretty well tell that you might hit financial trouble.

But, if you miss a payment, do you see yourself in trouble? If you forget to transfer money and get hit with some overdraft fees, will you say you're in trouble?  If you buy a TV or table and don't pay off the balance, are you in trouble?

Get where I'm going with this?

You might not be in trouble by doing one of those things, but what if you do them all together in order?

You might say, well at a certain point you'll recognize that you're in trouble.

Yeah, but only after it's gotten to where you're really in trouble.

See, when it's all small things like that, we'll kid ourselves into thinking ‘Ah, no big deal'.

If we do something minor that's a red flag, we'll do it.  We might even recognize that it's a bad thing.  We might promise ourselves not to do it again. We will likely recognize that this is opposite of what we want in terms of financial health.

Then, the next time we do something, we'll say the same thing.  But, here's the kicker.  We'll use the aftermath of the first bad decision as the baseline for the second bad decision.

This means that we'll only allow ourselves to see the latest ‘bad thing' as bad.  We will protect ourselves from seeing the total sum of our bad decisions.  We'll forget the bad decision we made in the past as a way to justify to ourselves that the bad decision we just made might not be so bad.

Bad move.

This can lead to a cycle where you're making lots and lots of little bad decisions.  You fool yourselves into thinking that it's not so bad, until one day you look around and you realize you're screwed.

And it didn't take a job loss or a major medical expense.  When those things happen, you'll recognize immediately the trouble this can get into, where the ‘smaller trouble' trap can actually lead you into bigger trouble.

So, what to do?

Recognize that you might be in trouble.  Look at any negative financial situation for what it means individually but also what it might mean if there's a pattern or if it's part of a cluster of bad things that have happened.

Evaluate your personal situation compared to yesterday, six months ago, and a year ago.  Honestly, you can substitute any ‘date' here, but the point is to keep an eye on how things are shaping up for you based on multiple points in the past.  This will let you recognize issues in the long term that you might miss if you're focused only in the short term.

Be honest with yourself.  You might not want to admit that you're heading down the wrong path.  Few people do.  But, you're going to have to figure it out at some point.  Don't wait to hit rock bottom.  Be honest with yourself now.

Change. Figure out what you need to do to change.  Ask for help.  Look for advice.  Just put a stop to the little things that are getting you opposite of where you need to be.

Have you ever had a bunch of little things happen that you didn't even know had turned into a big problem until it was too late?