Living within your means actually makes good financial sense
to be debt free. Check out these warning signs you are living
beyond your means and make some financial changes in your
life right now!
1. You can't pay bills on time
If you forget to pay your bills, it's one thing. But, if you don't
have enough money to pay bills on time, you are
overextended. Examining your spending habits and adjusting
them can solve this problem. Perhaps, you can't afford regular
massages or weekly salon visits. So think it over!
2. Lack of a financial cushion
If you don't have any savings account, it is one of the warning
signs that you are living beyond your means. Money in the
bank will support you after a job loss, a sickness and another
emergency. When you live beyond your means, you spend all
your money and you don't think about saving them. Try to
break this habit and you will free up money for a financial
cushion. Eat out less, shop less and vacation less.
3. You're constantly borrowing money
Do your family members or friends dodge your text messages
and phone calls? Probably it's because they know that you'll
ask for money. If your current income can't support your
lifestyle and you are always borrowing money, you are living
beyond your means.
4. Housing ratio is higher than 28%
When you live within your means, your housing ratio is less
than 28% of your income. To compute your housing ratio,
divide your monthly housing expense by monthly income.
You are living beyond your means if the ratio is higher than
28%.
5. Bad credit
Don't think that the late payments are the only cause of poor
credit. Too much consumer debt also affects your credit score.
Even if you pay the bills on time monthly, your credit score
never increases. So think of paying off your debt. Don't rely
on your credit cards, since it can cause high credit card debt.
6. You've exceeded your credit card limit
Have you ever maxed out a credit card? It's a bad feeling,
right? And when you have exceeded your credit card limit,
it's even a worse feeling, because now you are paying your
bill, interest and over-limit fees. That's a ton of money to put
towards only one bill. Plus, it can lower your credit score.
7. You use your credit card to pay bills
Using your credit card to pay off your basic bills such as
utilities or other credit cards bills is a red flag. And
transferring balances from one card to another is also a
warning sign of living beyond your means because you are
not paying anything down.
8. You only pay the minimum payment
If you only pay the minimum payment every month, its' one
of the biggest sign you are living beyond your means. Paying
the minimum won't help you pay off your debt and you will
be paying more in interest, and this can only add to the
problem.
9. Denied new credit
If you do not have the cash, but you want a new laptop or flat
screen television, you might apply for store credit. You think
that you have enough income and you can afford the monthly
payments. However, income is not the only factor that can
determine whether you're approved. The stores also take into
consideration your existing debt. Denied new credit indicates
living beyond your means.
10. Your credit balances are high
It's okay to have more than two credit cards. However, if all
of the balances on your credit cards are high, you are
definitely living beyond your means. Moreover, if you have
high balances it will prevent you from getting a new credit
and it's more difficult to pay off, thus you will end up paying
tons in interest.
11. You try to keep up with your friends
Does your best friend shop and vacation often? Do you try to
keep up with her lifestyle? If so, you are probably living
beyond your means. There is nothing wrong with a little fun,
of course, if you can afford this fun.
I know living within your means is restrictive, but you can
enjoy financial happiness and peace of mind. Are you living
beyond your means? What are you going to do to change the
situation? Please, comment below!
Via: financeelements
No comments:
Post a Comment