6 Signs That You Are Living Above Your Means

People have given up that good old habit of putting money aside just in case. They buy things that they do not need and houses that they cannot pay for. They are behind on their bills and have a record level high of debt on their credit cards and loans. I don’t know what it is, but some people are no longer financially responsible. They have forgotten how to live within their means. Here are six signs that you are living above your means:

1. No Savings

If you have no savings, you are probably spending more than you can afford. With no money set aside for emergencies or retirement, you may be setting yourself up for a disaster, unless of course you win the lottery or get some kind of inheritance. Imagine if someone gets sick, your roof needs to be replaced, your house burns to the ground, or you need to take in a parent or a family member. It would be extremely hard with no savings. 

2. You Are Addicted To Buying On Credit

Another sign that you cannot afford your lifestyle is when you start buying everything on credit. That is the worst sign of all. If you pay your living expenses and other things with the credit card or your checking account overdraft, you are definitely in over your head. Buying on credit is not a solution when you do not make enough money to cover your costs. You need to change your lifestyle to your income and not buy your lifestyle on credit.  

3. Your Bills Keep Piling Up Out of Control

Make an inventory of your monthly bills. Check to see just how much you have to pay every month, but also check how much of what you pay you really need. The latest smart phone, state-of-the art laptop, premium TV package when you are barely at home, and many other luxuries that generate countless monthly bills that add up to an amount that you can’t afford to pay. If your bills are spiraling out of control, you are definitely living above your means.

4. You Are Not Able To Pay Off Your Credit Card Balance

You are not supposed to buy anything with your credit card that you would not be able to repay entirely at the end of the month. The fact that you pay only the minimum due amount on the credit card balance is a clear sign that your lifestyle does not match your income. The same is true when you are sending only a small contribution toward the principal balance and not towards the outstanding balance, which only increases your credit card debt.

5. Your House Eats Up More Than 35% Of Your Income

House related costs, such as property taxes, mortgage, and insurance, account for a large part of your expenses. Banks have calculated that when these costs eat up more than 35%% of your gross income, you are  simply living above your means. When banks loosened their credit requirements, many people rushed into buying the home of their dreams ignoring the fact that they might not be able to afford it. When your home takes up over 35% of your gross income, it’s hard to enjoy life when such a huge portion is going towards your home.

6. You Try To Cover Outstanding Debt With New Credit Cards

When you get a new credit card with a lower interest rate to pay off an older credit card you are without a doubt in over your head in a lifestyle that drains you of money you do not have. Using a new credit card to pay for another only increases your outstanding debt in time. If you cannot pay your existing credit card from what you earn, you cannot afford your lifestyle.

Do you know anyone that is living above their needs? If so, what are doing to assist them?

Photo by Dubai Owner

9 comments

  1. I know of so many people living above their means. One of my good friends is the best example of that. Only one of them works in their relationship (him) and he has worked every single day for the past 3 weeks to support them, and this is at 16 hours a day.

  2. These are all so true! I definitely know people like you mention. I just try to stay out of it but if somebody asked for help I would be glad to help them!

  3. Mary Rhodes says:

    It's so dangerous to start collecting credit cards, you never know where It might end up!!!!

  4. Carli says:

    I know plenty of people who live like this but I don't think it's my place to say anything. We often struggle too due to massive medical bills so it's hard for me to know everyones situation. Although even with our issues we don't do these things. :-)

  5. Lenders always denied on bad credit, you must have good credit history when goto independent lenders.

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