Things That Can Ruin Your Finances — And How to Protect Yourself


All of us would like to build wealth. We work hard, and we try to save what we can. We follow basic personal finance advice. We spend less than we earn, we tuck away our savings in bank accounts, we invest in stocks and bonds. But all of this isn’t enough to ensure that we stay financially solvent. Unfortunately, dangers can still wipe out all of our hard-earned savings.

But there’s good news: We can protect ourselves and recover from the dangers and incidents that can threaten our finances. Here are some of the biggest dangers that are looming in your financial future — and how you can protect yourself.

Medical bills

In America, medical bills are the single biggest culprit in American bankruptcy cases. Unfortunately, we can only do so much to avoid them. We can each do our best to eat well and exercise — a healthy lifestyle will decrease your chances of getting injured or sick — but some injuries are unavoidable.

You can protect yourself by investing in a good health insurance policy and taking advantage of tax-advantaged health savings accounts. And you may also have legal options.

If your medical bills stem from an accident that was caused by someone else’s negligence, the experts at Avrek Law say, then you may be entitled to compensation. You should reach out to an attorney who specializes in personal injury law and fight for your rights.

Risky investments

Investing is a powerful way to build wealth. But not all investments are the same. Smart investing means putting your wealth in a diverse portfolio that balances risk with growth potential. That’s not the same thing as putting all of your money in penny stocks or risky assets.

Unfortunately, some investors lack the financial literacy or self-control that it takes to build a balanced portfolio. You should work with a financial adviser to make sure that your portfolio is a sensible one. If you’ve made an investment that feels like a scam, you should contact a lawyer. You may be able to recover your funds through a lawsuit or report the scam to the authorities.

The cycle of debt

Debt is one of the most dangerous things in the world of finance. Yet many of us have debt right now — and debt can also sometimes be healthy.

Here’s the thing, though. Debt is only healthy when it’s working for you. If debt helps you build wealth — as in the case of a mortgage — that’s good. If debt is convenient, as with a credit card (one that you pay off properly), that can be good, too. But if debt is high-interest and growing — like out-of-control credit card debt, payday loans, and other forms of dangerous debt — that’s bad news.

When your debt has a large principal and high interest rates, it can actually grow faster than you can pay it off. Even as you keep paying, your debt will get larger instead of smaller. This is called the cycle of debt, and it’s a disaster for your personal finances.

Getting out of debt can be tough, but a financial adviser can help you find a path forward. You may also have legal options: a bankruptcy lawyer can help you discharge some debts in bankruptcy or cut a deal with creditors to consolidate debt. If your debt is because of a personal injury, you may be able to get relief through a personal injury lawsuit.