You could be living beyond your means and not realize it. Why is this a problem? Well, when we live beyond our means, we can quickly run up debt. This debt can snowball until it becomes hard to manage, a real crisis. That is why it is so important to recognize the early warning signs and make the changes that are necessary to get your finances back on track.
Sometimes it seems as though you are supporting your lifestyle and don’t have a problem paying for anything. After all, your credit cards aren’t being turned down at the store, and you haven’t had a need to consider bankruptcy. However, spending and debt has a way of quickly spiraling out of control. Review the following five signs to find out if you need to start getting things under control.
You Are Not Saving
Putting aside a minimum of five to ten percent of your net income isn’t a luxury, it is a necessity. You need to have money set aside in preparation for unexpected emergencies. These emergencies can vary from the relatively minor, the dishwasher needs to be replaced, to the major, a serious illness or injury. You also need to consider saving for retirement, no matter what your current age.
You Use Overdraft Protection
Are you making use of overdraft protection that kicks in when you pay for a bill without the money being in your account? Your expenses should be covered by your income, and covered on time. Having to use overdraft protection is a sign that you are living beyond your means. Plus, you are charged additional fees for the service, money that should be put to work elsewhere. Establish a budget for your bills.
Your Credit Card Debt is Growing
Are your credit card balances larger than they were just a few months ago? Interest plus too much spending will make your debt balloon out of control. If you are spending more, where is it going? Figure out the bulk of your extra spending and then curtail it before it is too late. Even great deals can wind up costing you a lot when you add in all of the interest you will pay on your credit cards.
You Hide Spending from Others or Yourself
If you find yourself hiding purchases or the amount you spend from others, or if you refuse to look at your bills to see what it is you are really spending, well, these are sure signs that you are heading for trouble. You may be feeling guilty about the spending or anxious about facing your debt. Coming clean and facing the reality is the only way to start making some changes.
You Have Late Fees on Your Bills
If you are incurring late fees on your bills, it means, naturally, that you aren’t paying your bills on time. This can mean that you don’t have enough cash flow to make prompt payments. This is a problem on two levels. First, you should make sure that you have enough money available to pay your bills so they don’t wind up in collection if money gets even tighter. Second, paying bills late every month can damage your credit history, leading to other problems down the road.