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Five signs you may be living beyond your means

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Brenda EcheverriaIf you find you’re coming up short financially every month, you may be living beyond your means. Recognizing some of the signs is a first step toward getting your cash under control. Here's a few to look for.

  1. I don’t have enough savings to cover six months of expenses.Setting aside at least six months worth of income is ideal, but even three months worth is reasonable. Don’t be caught short for the unexpected like a home or car repair, unemployment, or major medical expense.
  2. I paid an overdraft fee in the last 12 months.
  3. I take vacations on credit. Paying for vacation on credit could make it more expensive than it’s worth. If you want to charge your trip for purchase protection reasons, save enough first so that you can pay off the balance before you’re charged any interest.
  4. I have exceeded my credit limit on one or more credit cards.
  5. I only make minimum payments on my credit cards. Credit card debt is expensive. It is not tax deductible nor does it finance a potentially growing asset (like a house). Instead, it’s like sending money down a drain never to be seen again. Pay as much as you can beyond the minimum and avoid adding more to the account(s). 

Living within your means may feel a bit restrictive but it’s wise. It may require you to make lifestyle adjustments, but the changes also free you from the burden brought on by financial woes. We'll share five more signs to look for next week.

Brenda Echeverria, Financial Planner