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7 Signs You're Living Beyond Your Means and How to Fix It


on 6/5/2019

Young guy watching money fly out of wallet

Do you have champagne taste on a beer budget? Or maybe a lender has told you that you’re over extended? Either way, it boils down to spending more money than you actually bring home throughout the year.

Here are some of the tell-tale signs of living beyond your means and what you can do it fix it.

1. Carrying a Credit Card Balance From Month-to-Month 

If you have a high credit card balance and pay just the minimum each month, you can end up carrying this balance for years while paying a lot in interest. You might also be tempted to make more purchases on this card since it already has a balance. 

The Fix: Try to make double payments and stop using the card until the debt is paid off. If you have multiple cards with a balance, you may consider a debt consolidation loan to help save on interest and make paying down the debt more manageable.

2. Stressing About Bills 

Monthly bills should be fixed into your budget. You should be able to pay them easily without any stress. 

The fix: Take a look at your monthly budget and find ways to cut back. Conserve light and water usage, cancel unnecessary subscriptions for products and services, and it also might be time to lower the 300 channel cable package or the data gigs on your phone plan. If you have a high-interest rate on your auto loan, consider refinancing the loan at your credit union where you often will find lower rates.

3. Unable to Save 5% of Your Monthly Income 

If you can’t put away at least 5% of your monthly income into savings, you’re living beyond your means. 

The fix: Trim your expenses and restructure your budget to include at least 5% for savings. If you need a little discipline for this you can set up an auto transfer to your savings account to correspond with your direct deposit each payday.

4. Non-Existent Emergency and Rainy-Day Funds 

Ideally, you should have an emergency fund to cover major unexpected expenses, and a rainy-day fund for small expenses you can anticipate.

The fix: Start building your funds now by putting away as much as you possibly can each month. Start with an initial goal of one month's salary in your emergency fund and work up to 3 months.  Your rainy day fund should start with a cushion of $500.

5. Your Mortgage Payment Eats Up More Than 30% of Your Monthly Income 

Most financial experts agree that your monthly mortgage payment should not exceed 30% of your monthly take-home pay. The fix for this situation is a bit more complicated, but not impossible!

The fix:  There are a couple of options for this one:

  1. Find ways to boost income. Seek a raise at your current job, freelance for hire, or find another side hustle for extra cash. Delivery and car ride services are in high demand these days and pay quite well if you like driving.
  2. Scale back your mortgage payments. Consider a refinance. The Mortgage Team at Genisys is always ready to help. Call a Mortgage Consultant at 248-745-3353. If your mortgage is crippling your budget, consider downsizing to a smaller and less expensive home.

6. Leasing a Car Because You Can’t Afford to Purchase It 

Can you afford to pay for or finance your car? If the answer is no, then don’t get the car.

The fix: If you currently have a lease, at turn in time, look for a vehicle that is more affordable. Getting an auto loan pre-approval will help give you a budget to work with as well as an easier time with the financing paperwork.

7. Friends Spending Habits Dictate Your Financial Decisions

Thanks to the hyper-sharing culture of social media, the pressure to keep up with the Joneses is stronger than ever. If you find yourself making financial decisions based on your friends’ choices, you’re likely spending more than you can afford. 

The fix: Stay focused on your life and your wallet. Like our parents told us when we were kids, your friends should like you for you, not how much money you have! This may mean, bowing out of dinners on the weekend or extravagant vacations, but you’ll be better off in the end when your finances are healthy… and you aren’t working when you want be retired! 

If you’re in over your head, our friends at GreenPath Financial can help! Their team of debt counselors and budget wizards can help you gain control of your finances.

© Genisys Credit Union and www.genisyscu.org, 2019. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content.

SOURCES:

https://www.google.com/amp/s/www.hermoney.com/invest/financial-planning/warning-signs-of-living-beyond-your-means/amp/

https://www.investopedia.com/articles/pf/08/in-over-your-head.asp

https://rockstarfinance.com/7-signs-that-you-might-be-living-well-beyond-your-means/

 

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