It was not that long ago that the prospect of any major purchase, be it a new home or car or even a television set, was a major consideration for the average American. Savings, careful budgeting, and sacrifice were the name of the game. Then came credit and everything changed. Today, wanting something new is and having it is as easy as pulling out a small plastic card and worrying about the repercussions another day.
It’s a slippery slope however and habitually buying that which you cannot afford has a major psychological effect on a person who soon becomes “unable” to cut back on their style of living. We’ve all heard the term “champagne taste on a beer budget,” but how do we tell if that is the case for us?
Here are five hints to help you find out:
You Know What an Overdraft Fee Is Because You Routinely Pay It
There is really no excuse to overdraw on your bank account. If there is no money there, then don’t use it. However, if you have absolutely no idea how much money is in your bank account and/or cannot get through another billing cycle without taking the risk that there won’t be any money, it’s probable that you are living beyond your means.
You’ve Had to Skimp on Essentials
Ever eaten Ramen for a week straight because you didn’t have the money to buy food until your next paycheck? What about choosing between paying the rent and paying for your car? These items need to be the first on your list of bills and yet when people saddle themselves with too much credit card debt they are the first to go. Your living expenses need to be covered before any luxuries and if you still cannot afford them, then it’s clear you need to reevaluate your lifestyle choices including the car you drive or the place where you live.
You Cannot Remember the Last Time You Used Cash for a Purchase
If every pay check you get is already spoken for, that is, there is no cash left after all the bills are paid, then you have a problem. Not only are you failing to save for your distant future, but in the event of an emergency you are dooming yourself to just take on more credit card debt.
You Use Debt to Pay Debt
While credit card companies make it alluringly easy, using cash advance or balance transfer