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Living beyond your means? Some signs that you're spending more than you're making

February 6, 2013
The Intelligencer / Wheeling News-Register

With an avalanche of marketing messages hitting us every day, it's no surprise that many people have acquired an appetite for the newest and biggest items offered by retailers. That's not a problem in itself.

Unfortunately, many people also carry an obsessive, sometimes financially destructive desire to have the same possessions that their friends, relatives and peers own. These following four indicators are all red flags that should make you stop and think before buying those big-ticket items.

Obtaining new credit for the purpose of purchasing more: If you find yourself taking out personal loans or responding to multiple pre-approved credit offers, it may be time to stop shopping for desirables.

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Entertainment centers, pool tables and gas grills will always be there for you to buy. Saving time and cash for later instead of splurging now will save you money in the long term that would otherwise go to finance charges and credit card interest.

That doesn't mean putting off purchases forever. By getting better financial footing right now, you'll be able to comfortably spend more in the future.

Using credit cards to cover monthly expenses: Frequently, there are incentives like airline miles and bonus points for paying with plastic. However, if you're drawing on credit cards instead of your checkbook to pay your utility bills, the real message in this action is to curb unnecessary spending.

The habit of paying with credit will give you the false belief that you have more spending cash than you actually do. You'll be more likely to use this money toward purchasing unnecessary items instead of allocating it for your bills.

Not paying credit card balances in full: Credit card companies permit those low minimum payments so they can collect more interest on higher outstanding balances.

Depending on your interest rate, you can be charged anywhere from a penny to twenty-nine cents on each dollar in that remaining balance.

Limit splurging on extras the instant you find yourself struggling to pay off your credit cards each month.

Borrowing from retirement: Tapping into funds for the future to finance your lifestyle today should never happen. Finding yourself in this situation is a clear indicator that you're buying too much and not saving enough for tomorrow.

If you're thinking about borrowing from your 401k, consider cutting variable costs related to entertainment and shopping before doing so.

In our society today, "bigger is better" is a common phrase used to describe materialism. There's nothing wrong the desire to live large, but living with a larger savings account is much better than owing large credit balances to pursue a possession-fueled happiness.

And if you save more money today, you'll really be able to live it up in the future.

 
 
 

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