6 Signs you are living beyond your means

Meiken Barnes | February 06, 2017

6 Signs you are living beyond your means and what you can do about it NOW:

Are you feeling overwhelmed by your finances?

Here are 6 signs you could be living beyond your means and 2 actions you can take today, that might help you.

Credit card debt that doesn’t get cleared
Using your credit card can get you out of a sticky situation and is a quick solution in case of an emergency for the short term. If you’re carrying credit card debt that doesn’t get cleared monthly or you are getting by with making the minimum repayments, then you are spending more than you have allowed for. If you have been paying off credit cards for years, you are paying a fortune in interest! It’s time to stop living beyond your means and pay off the cards for good. Set a budget with all of your expenses, break the annual costs (like Property Rates, Car Rego and insurances) down to weekly or fortnightly (however you get paid), know what goes into your bank account and what is accounted for with the fixed expenses. Cut up the cards and make a plan to factor in a regular payment to pay them off for good.

No savings or emergency funds
Have you got money for a ‘rainy day’ if something went wrong? The old rule was to save 10% of your income. If you are unable to save 10% or accelerate repayments on your ‘good debt’ (being your mortgage), then you are living week to week and it’s time to give the budgeting an overhaul to find a way to start building your savings. Budget! Budget! Budget! Set up a separate bills account and a savings account (or use your offset account or mortgage for savings).

Overdue bills or paying bills with credit
Bills stacking up? Late notices or overdue amounts you are trying to pay off? Overdue bills are stressful and can add unnecessary costs with late payments or dishonours. If you are worried every time you open your mail it means you haven’t allowed for bills in your budget. The way you pay your bills could also affect your credit scoring and could go against you when you apply for finance. If you cannot manage the little expenses, how can you prove to the Lender you can manage the big ones? Set up a separate bank account for your bills. Work out your budget with ALL of your expenses and set up as an automatic debit on pay day with a regular amount to your new bills account. Automate everything! With technology these days and internet banking capabilities, there is no excuse.

Making the minimum repayments
If you are making the minimum repayment on your home loan / personal loan / credit cards and car loans, then it’s likely you aren’t saving any money at the same time. Do you have emergency funds? When you get to retirement age, will you be debt free and have savings? Do you know how much money you need to retire and live a lifestyle you are accustom too? If you are paying the minimum on your home loan because you are focusing on paying out other debts first, great and well done. When you do pay those other items off though, don’t go and buy more! Start saving or think about investing or paying down the home loan faster.

You hide what you buy
It’s exciting buying something new so why aren’t you showing your partner or parents? At some point we have probably all been guilty of hiding a purchase or spoiling ourselves a little too much, are you using credit to do it? If you need to hide your purchases it’s usually because you didn’t need it in the first place. Before you make a purchase consider where the money is coming from.

You haven’t set a budget
If you aren’t working with a budget and a few of the above points are sounding familiar, this could be to your own detriment. A budget will tell you on a week to week basis what you can and can’t afford based on your net household income. Understanding your needs and wants when it comes to finances is important, your wants should only be thought of if you are making purchases from your savings.

If you related to 2 or more of the above, taking action is a must! Unless you have a unique situation which attributes to the above ie, studying and not working full time yetor waiting for a significant payment then you need to stop living beyond your means. You may have experienced hardship with a change in employment or injury, or you could just be living beyond your means because of an expectation, the expectation to drive a nice car, the expectation to live in a big house, the expectation to wear new clothes, dine out regularly or go on weekend trips away.

Step 1. Set your budget (email us for a free excel spreadsheet or use your iphone). Know what you are earning and what your expenses are. Any money left over? Great, now either use this to pay down debt (if you have bad debts), save some of it and/or reward yourself. No money left over? Then it might be time to consider downgrading, rent a cheaper house, downgrade your home, drive an older car, stay in on a Saturday night etc.

Step 2. If you have multiple credit cards, personal loans and a home loan call us to review your financial situation and let us provide you with options and a plan to move forward. intouch Finance offer a completely free service and we would be happy to put you intouch with your finances.

For our free 10 step action plan to put more money in your pocket go to www.moneyinmypocket.com.au

Let us put you more intouch today 0260211320