Jason offered his expertise to Yahoo! News for an article about outpacing your income. Might you be living beyond your means?
An article published recently by Yahoo! News enlisted in the help of our own Jason Noble to compile a list of six signs that someone might be living beyond their means. In his two decades as a financial advisor, Jason has worked with nearly every type of client. He knows it isn’t always obvious when someone can’t afford their desired lifestyle, but he does know which signals to look for.
One dead giveaway is increasing credit card debt. Necessary expenses and emergencies happen, and it can be easy to swipe your credit card and watch the debt pile up. The problem is when that debt isn’t paid off, or at least chipped away at, which can build interest. Jason also noted inflation’s impact on credit card debt, saying, “As inflation continues to go up, we have seen credit card debt surge as a way to keep up with the higher costs.”
Hiding your spending habits and indulgences could also be evidence of overspending, as hiding can be an obvious sign of guilt. Jason recalled a story about a couple with a combined yearly income of $175,000 and reasonable expenses and credit card debt. For some reason, they just couldn’t make ends meet.
Jason said, “Finally, the husband said, ‘I have a secret credit card that has $35,000 of debt on it.’ As tears welled up in his eyes, his wife responded, ‘I, too, have a credit card that I’ve kept from you, and it has $25,000 on it.’ This is an extreme example, but it shows how keeping your spending in the dark is easier than bringing it to the light.”
It’s also possible that your car or home is more luxurious than is necessary. “Home and car payments shouldn’t make up over 50% of a person’s income,” Noble said. “This is a general rule, but the lower the monthly percentage of your income that goes toward home and auto, the better off you’ll be financially.”
Other telltale indications from the article include living paycheck to paycheck, being unable to afford an emergency expense and spending quicker than you earn income. All these factors could point to a lifestyle that is unsupportable by a person’s current income.
If these characteristics sound all too familiar, that’s okay, but to be financially healthy, those habits need to come to an end. At PCIA Charleston, we specialize in helping you find that end, and we approach each scenario without shame and with your goals in mind.
Picked up by multiple media outlets, you can read the entire article by visiting Yahoo! News, Yahoo!, Yahoo! Finance, MSN and GOBankingRates.