Are you living beyond your means? Most people would answer no. Sure, the bills may be a bit tight at times, but you’ve got it under control. The truth, however, is that while you may have become great with juggling your finances, living a lifestyle you can’t afford is a trap that’s very easy to fall into these days. For those who don’t have the income to cover the things they want and need, there’s credit, loans, and other financial solutions that keep them “afloat”.
Aren’t Debt, Loans, and Credit Cards Normal?
Though this may seem normal or nothing to make a big deal of, the reality is, that spending more than you can actually afford will eventually catch up to you. Unfortunately, it won’t just eat at your pockets either. When you’re struggling with a plethora of financial issues you could lose everything. Not to mention, the stress of it all can weigh heavily on your physical and mental well-being.
Is Your Lifestyle Too Expensive?
There are plenty of signs that you’re living beyond your means. Some are more obvious like having mountains of debt, maxed out credit cards, or a property in foreclosure, but others aren’t so easy to spot. Below, are a few telltale signs you need to make drastic changes to improve your life.
You Have No Money Left At the End of Each Pay Cycle
You work hard to get a check and the moment you receive it, it’s gone. You pay the mortgage, rent, car note, utilities, grocery bill, and maybe you have enough leftover for lunch and gas for the week (or worse, your check doesn’t even cover the regular bills).
Living paycheck to paycheck means that you’re living beyond what you can truly afford. If you’re in the red or have to use every penny to cover your expenses, you need to re-evaluate your spending, find ways to cut back on certain necessities and implement a monthly budget.
You’re Paying Too Much for a Vehicle
For some households, having a reliable means of transportation is a requirement to get to work and school in a timely fashion. Be that as it may, lots of individuals make the mistake of investing in a vehicle they can’t truly afford. Just because there was a great deal at the dealership or the monthly payments were low doesn’t mean you can afford it as there are other costs associated with owning a car.
If it’s a gas guzzler, the insurance rates are high, or it keeps have maintenance and repair issues that cost you a ton, then chances are you can’t afford the car. If you’ve found yourself in such a scenario, you may need to consider downsizing. You can find companies like Cars Sold for Cash to help you get cash for your car so you can invest it in something more affordable.
You Have Nothing in Savings
They say you can’t take money with you when you’re gone, but that doesn’t mean you should recklessly spend it all while you’re here. You never know what could happen in your life that could result in the need for additional funds. You could lose your job, get injured, break up with your partner, lose a loved one, or have some other personal emergency that requires quick cash.
Though the number varies it is recommended that everyone have at least 3-6 month’s worth of expenses saved in an account for a rainy day. If you don’t have this, then you need to start finding ways to cut back on your spending habits to increase your saving.
You Spend More Than 30% of Your Income on Housing Expenses
Things like a house or apartment, electricity, gas, and water are necessary expenses. They’re also some of the most expensive on a monthly basis. It has been recommended by financial experts that the average person only spend about 30% of their annual gross income on housing costs. Spending more than that could lead to financial chaos down the line including eviction or foreclosure.
How much are you spending on housing costs? If it’s more than 30% of your gross income each year, you may want to consider downsizing. Renting instead of owning a home, or finding a smaller house or apartment can reduce how much you’re investing in housing which frees up your money for other wants and needs.
These are just a few of the red flags that you’re living a lifestyle you can’t really afford. As you can see, you can easily end up living beyond your means without ever having bought anything luxurious. People stretch themselves thin financially all the time by biting off more than they can chew when investing in bare necessities like a house, car, and food. If you believe you’re in this boat you need to get serious about the decisions you’ve made and dig yourself out. Find ways to cut back on unnecessary spending, downsize, and, if necessary, get help with your finances from an expert.