When you spend more money than you make each month you are bound to have money problems very quickly. The bad part is that most of us never realize we are spending that much until it’s too late. It is important to know what and how much your
1) major expenses are, as well as
2) keep tabs on minor spending as well.
How many times have you used the credit cards to buy a TV, school clothes and supplies, fixed the car, or any number of things and not realized that you just exceeded your monthly income. It is important that whatever you put on a credit card will NOT exceed your total monthly income. You may have even realized it but thought there is always next month.
Credit cards are the biggest culprit but they aren’t the only way to spend more than you make. Things like payday loans or car title loans also come to mind. Paying $15 to use $100 for a week doesn’t seem too bad. However, when you consider that you are paying almost 400% in interest over one year these loans make interest on credit cards look like a great deal.
Normally, installment loans have a lower interest than either credit cards or payday loans but they can still cause problems if you aren’t positive that you can make the payments each month. In my opinion, a house payment and the purchase of a car the only real legitimate reasons for paying interest. If you use your credit card for necessities other than shelter and transportation, i.e.: food, paying other bills, etc. please make sure not to pay interest on those items by paying them off in full at the end of the month. I understand that very few people have the means to make these purchases with cash. However, being conscious of the spending on the major and minor expenses will help you gauge if you are going over budget.
One last thing that I make sure I remain true to day in and day out—not living beyond my means…There is something to be said about living a “simple” life—and I am not talking about the show with Paris and Nicole J. We are too concerned in our country with “keeping-up-with-the-Jones'”. It is important to not live your life by trying to impress everyone else, but rather living a life and a lifestyle that makes you comfortable.
If you aren’t careful you can still get yourself into trouble by buying or renting “more” house that you can afford or having car payments that don’t fit your budget. Live within your means and you will be a lot happier and be able to NOT spend more than you make…