4 Symptoms of Living Beyond Your Means

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Many people don’t realize they’re in financial trouble before it’s too late. Individuals who end up bankruptcy often say the same thing: “How did I get here?” More and more Americans are living beyond their means, especially younger Americans. The problem is that living beyond your means has become a societal norm. Consequently, many people don’t recognize that they’re living beyond their means. So, for your consideration, I present 4 symptoms of living beyond your means. As soon as any of them show up, make the needed adjustments, i.e. spend less, in your financial life immediately.

1. You use loans to pay debts. If you’re using debt to pay old debt, then you’re definitely living beyond your means.
2. You only use credit to make purchases. You can’t afford the lifestyle you’re living with cash anymore, so you move to credit cards. To make yourself feel better, you pay with cash that’s drawn from your credit. Cash from credit is the same as just using your credit card- you’ll have to pay it back.
3. You get overdue notices everyday. The only thing you get in the mail is letters from creditors wanting their money, but you don’t have the money to pay them. It might be time you start reining in on your spending.
4. You don’t know how much you’re spending. If you never have money and you don’t know where it has gone, you’re probably in trouble.

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[tags]debt, frugality, bankruptcy, credit cards[/tags]

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7 Comments

1. Minimum Wage on 12.06.2007 at 07:16 (Reply)

   I earn minimum wage and have student loan debt. How am I supposed to rein in my spending?

2. Brett McKay on 12.06.2007 at 07:57 (Reply)

   Minimum Wage-
   Hmmm… this is a tough situation. I don’t know your complete situation, so I what I might say probably doesn’t apply to you.

   There’s lots of ways you can cut back on spending. Check out this post I did a while back ago: http://www.frugallawstudent.com/2007/05/17/180-money-saving-tips-to-turn-your-financial-life-around-180-degrees/

   If you’re single and on your own, one of the easist ways to reduce your expenses is to get a roommate. You can cut your rent in half just by doing this. Get two roommates and you’ll only be paying a tird of the rent.

   About paying your student loans: there’s an income contingent repayment plan. It figures how much you pay each month based on how much you make. Because you have a minimum wage job, your monthly payment would be considerably lower. Of course this isn’t a permanent solution.

   I think you make a tacit point in your comment. Cutting spending will only get you so far. There comes a point when you have to increase your income. Besides getting a better paying job, you could also start a small side business to supplement your income. Perhaps tutoring or consulting. If you do an internet search on “make extra money” you’ll come up with hundreds of ideas.

   I hope this helped. If you have any more questions or just need to bounce some ideas off of someone, please feel free to email me using my contact form up top. Good luck!

3. dan on 12.06.2007 at 08:28 (Reply)

   #4 reminds of a lot of what ramit sethi of iwillteachyoutoberich says: “Well, I guess I spent this much.” And I will admit that the worst feeling for me is looking at online statements and saying, “oh yeah, i did buy that.”

4. dan on 12.06.2007 at 08:30 (Reply)

   *to clarify, ramit complains about when other people say that. My wording was kind of confusing.

5. chitowngirl on 12.06.2007 at 12:38 (Reply)

   That’s me all the way except for #3. No overdue notices as of yet. I am sooo glad that law school is now over.

6. Brett McKay on 12.06.2007 at 13:43 (Reply)

   Dan-
   I’ve definitely had those “oh yeah” moments. I think one of the biggest problems with debit cards is that it’s easy to lose track of what you’ve spent. It’s so convenient just to swipe, that many people don’t give a second thought to how much they spend.

7. Brett McKay on 12.06.2007 at 13:49 (Reply)

   Chitowngirl-
   Congratulations on law school being over! I stopped by your site and really enjoyed reading your posts. It’s nice to see how other law students are managing their finances. I wish you luck on the bar.

   Take care,
   Brett

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