13 Signs That You're Living beyond Your Means ...

1. Zero Savings Account

One of the biggest signs that you're living beyond your means - lack of a financial cushion. Money in the bank can sustain you after a job loss, an illness or another emergency. Unfortunately, many who live beyond their means spend all their cash and don't think about saving their money. Break this habit and you’ll free up cash for a financial cushion. This calls for drastic measures, such as eating out less, shopping less and vacationing less.

2. Housing Expense

Housing ratio refers to the percentage of your income spent on your rent or mortgage. In a perfect world, your housing ratio should be less than 28% of your income. To compute your ratio, divide your monthly housing payment by your monthly income. If the ratio is higher than 28%, you're living beyond your means.

3. Can't Pay Your Bills on Time

True, lateness can be attributed to forgetfulness. But if you have good intentions, but not enough money in the bank to pay bills on time, perhaps you're overextended. Examining and adjusting your spending habits can solve this problem. A review may reveal that you’re unable to afford weekly salon visits or regular massages.

4. Bad Credit

Late payments are not the only cause of bad credit. Too much consumer debt can also lower your credit score. If you pay your bills on time each month, yet your credit score never increases, consider paying down your debt. People who live beyond their means typically rely on credit cards, which can cause high credit card debt.

5. Trying to Keep up with Your Friends

Do your friends vacation and shop often? Do you try to keep up with their lifestyles? If so, you run the risk of living beyond your means. There's nothing wrong with a little indulgence and fun, as long as you can afford this fun.

6. Constantly Borrowing Money

Do friends or family members dodge your phone calls and text messages? Maybe it's because they know you will ask for cash. If your present income cannot support your lifestyle, and you’re always asking mom or dad for a handout, a lifestyle adjustment is in order. “Living within your means” means that you’re able to afford your lifestyle without needing financial help from others.

7. Denied New Credit

Do you want a new flat screen television or laptop? If you do not have the cash, you might apply for store credit. You might reason, “I have enough income to afford the monthly payments.” But income isn't the only factor that determines whether you are approved. The store takes into consideration your existing debt. Being denied financing can indicate living beyond your means.

8. You’ve Exceeded Your Limit

If you’ve ever maxed out a credit card, it’s not a good feeling. What’s even worse is when you’ve exceeded the limit on your card because now you’re paying your bill, plus interest, plus over-limit fees. That’s a lot of money to put towards just one bill and it can end up lowering your credit score since your balance is high.

9. Your Credit Balances Are High

There’s nothing wrong with having more than a couple of credit cards. But, if all of the balances on your credit cards, loans, etc. are high, you’re probably living beyond your means. Having high balances can prevent you from getting new credit and it’s harder to pay off, so you end up paying more in interest.

10. You Only Pay the Minimum

If you can only afford to pay the minimum payment each month, take it easy on the credit cards. If you can’t afford to pay off the balance in its entirety, at least try to put a dent in your total balance. Paying only the minimum won’t do much to help you pay off your debt and you’ll be paying tons in interest, which only adds to the problem.

11. You Pay Bills with Credit Cards

Using credit cards to pay off basic bills like utilities or, worse yet, other credit cards bills is a bright, red flag. Even transferring balances from one card to another can be a sign of living beyond your means since you’re not technically paying anything down or paying it off.

12. You Don’t Have Any Savings

I know how hard it can be to save money, I still struggle with it, but it’s something that has to be done. If you can’t afford to put any money aside, there’s a strong possibility that you’re in over your head in spending and/or debt. I know times are tough, but they’ll be even tougher if you have no financial back-up plan. Aim to save at least 5% of your income each month.

13. You Hide What You Buy

I admit, I’ve been guilty of buying new clothes and hiding them in my trunk so I can sneak them inside without anyone knowing. It might’ve seemed like a good idea then, but it sure isn’t now! If you feel guilty about your spending habits, lie or hide your purchases, you’re probably spending over your limit.

Living within your means is a bit restrictive, but wise. And although a lifestyle adjustment changes the way you spend your money, you can enjoy peace of mind and financial happiness. What steps have you taken to make sure that you live within your means?