Many people in the United States are in the habit of living beyond their means. Between 1993 and 2008, the rates of saving have declined increasingly and they hit the lowest levels they’ve ever seen since the Great Depression in 2006: they literally fell into negative territories. But by 2009, they had risen again about 7%: the highest rates had been at since 1993. Why did things change so drastically? When a recession swept in and left us all in financial gloom, consumers found that they had acquired more debt than they realized was possible and they should have paid attention to the signs that you’re living beyond your means. It took the global economic system almost crumbling to bits to get Americans to stop overspending. A lot of people ignored what has happening for far too long, and the National Bankruptcy Research Center shared that the number of bankruptcy filings had almost doubled by the time the year 2008 came to a close.
Are you worried about your financial state? Learn more about the most common signs that you’re living beyond your means.
Your Credit Score Is Lower Than 600
It’s the job of the credit bureaus to keep track of your payment history, loan balances and debts. They use the information the compile to arrive at a specific number that lets potential borrows know your creditworthiness. A credit score can go from a low of 300 to a high of 850. The higher your number is, the better. Generally, if your score is lower than 600, you might have a more difficult time getting loans. If you haven’t checked your credit score before and you don’t know what it is, you can get in contact with one of the major credit bureaus–TransUnion, Equifax or Experian–for a copy of your credit report. Improve your credit score by paying down debts and judgments and don’t apply for new credit cards: you might even want to consider closing a few accounts while you’re at it.
You’re Not Even Putting At Least 5% Into Savings
The average rate of personal savings in 2006 was a staggering -0.5%. This illustrates that most people were not only spending just about all their money, but they were also most likely dipping into their savings for funds to spend. Saving money can never be too much of a priority and in the crazy lives that we lead today, there will always be another expense to address that creeps onto our radars somehow. There are so many emergency situations that arise and you have to be as prepared as possible. When your retirement age comes around, you don’t want to have to struggle or depend on Social Security alone. Saving at least 10% of your gross income can create a very well-stocked savings account that will give you peace of mind. Stop ignoring signs that you’re living beyond your means!
You’re Not Attacking Your Credit Card Balances in Full
If you’ve heard somewhere that making the minimum payment on your credit each month is the right way to go, you’ve been told a terrible fib. Avoiding paying those credit card balances off in full only make the interest on the balances rack up with a vengeance. If you can’t seem to get together more than enough to pay tiny pieces of those balances off, you’re probably facing signs that you’re living beyond your means!
You’re Using More Than 28% Of Your Income for Housing Costs
What percentage of your monthly income goes to paying your mortgage, insurance or property taxes? If you’re coming up with a figure that’s more 28% of what you make, that’s probably one of many signs that you’re living beyond your means. Conservative lenders have always believed that using a rate that sits at 28% still allows everyday people to pay their mortgage and enjoy a standard of living that gives them wiggle room. You have to make it a priority not to get involved with anything that will keep you in debt longer. Only chase what you can reasonably afford.
You’re Having Trouble Getting Your Huge Stack of Bills under Your Control
Buying on credit is almost an institution in America. It might be easier to buy that expensive television with your credit card when the salesman puts it into monthly terms, even if there’s an extra $50 added on to your bill. At first, it’s all very easy to handle, but before you know it, you have a stack of bills before you that you have no clue how to handle. You have to recognize the signs that you’re living beyond your means and reel yourself back in!
If these aren’t enough signs that you’re living beyond your means, it’s certain you already know a lot of the others if you’re in a sticky financial situation. With continued hard work and effort, you can change your unfavorable circumstances.