In this a day and age, there are a number of reasons why a man could easily find himself living beyond their means. Banks and other institutions are seeking to maximize their profits by sometimes lending recklessly without doing the necessary due diligence to make sure that the person they are giving credit to has the ability to service it. The other reason is that people are living in a society where goods of ostentation have come to represent success. Unfortunately, this leaves many people living beyond their means. Look out for a few signs which can show that you are living beyond your means.
A low credit score
In many economies, it has become easy for anyone to get their credit score; whether for free or for a small charge. This is the first place to start for anyone who wants to know whether they are living within or beyond their means. Credit scores typically range between 300 and 800. 300 means that things are really bad and 800 means that you have an excellent credit record. So the higher you credit record the better. Any credit record below 600 is an indication that things are going south.
You have no savings
Anyone who is living a financially healthy life should be able to save at least above 5% of their income. The moment you see yourself unable to do this, you are spending all your income and you are skating on thin ice. Ask yourself what could happen when you have an emergency and you do not have any savings at all. You will be left with no choice but to borrow money you will not be able to service.
Your bills continue to rise
If you do a budget on a monthly basis, you can easily tell what you are spending. It is good and fine if this is kept in check. However, it becomes a problem when you start to see your bills rising without a good explanation. Most of the times these bills spiral out of control slowly without you noticing. When you put together small amounts, they end up being a large amount which may put a strain on your budget. This usually happens when you start buying on installment.
Watch your credit card
Anything which takes money off your credit card is an indication that you are buying things you cannot afford. If you could afford them you would not need to use a credit card. The irony of the credit card is that it has been specially designed for people who cannot make ends meet but it adds the burden of interest to someone who is already struggling. The one thing you should be doing is to reduce the balance you owe on the credit card.
You use more than 28% on your house
Any lender who knows what they are doing knows that anyone who is using over 28% of their income to pay their mortgage, house insurance and property taxes is likely struggling to make ends meet. But why 28%? This is the number that conservative lenders have concluded is the rate at which many people can pay their house expenses and still be able to make payments for everything else that they need.
It is important for every man to look at their expenses and decide whether they are living within their means. If you, like many other people, in many countries find out that you are living beyond your means, do something about it before it becomes too late.