Are you nervous when you present your credit card. We all like buying stuff. With credit card interest rates soaring, this is probably the worst time to let your desire get out of hand.
One in five Americans spend more than what they earned in the last 12 months, according to a Federal Reserve Board survey. Some may be relying on credit or dipping into savings to cover their spending because they are having trouble making ends meet. And some might be living beyond their means.
Whatever the reason, overspending is harmful because it can be a sign that you’re not in control of your finances. Your overspending might be making it hard to pay bills, have money for emergencies and save for the future. It could also lead to serious consequences such as bankruptcy. If you have to often stop yourself from overspending, you may have some financial issues you need to take care of.
Let’s look at 15 warning signs that indicate you are spending way too much.
1. Maxed out credit cards
Often, one of the first signs that suggest you’ve exceeded your shopping budget is maxing out two or more credit cards. While pushing the limit on one of the cards can be easily explained because the initial credit availability is low or a large purchase happens to max out the entire credit line at once.
However, the chance of having two or more credit cards maxed out due to pure necessity is highly unlikely. In most cases, that means you are overspending.
2. You go shopping every week
If you have a habit of coming home with shopping bags every time you visit the mall, and you do that at least once a week, then you are probably overspending.
3. Fear of credit card rejection
t checkout counters? If you’re saying a silent prayer every time you hand your card to the waiter after dinner, you’re probably overspending.
4. Paying credit card minimum is all that you can afford
Do you have to empty your money jar for the minimum payment everytime you get the credit card bills? Sending in the smallest possible dollar amount actually benefits the card company more than you. When you pay interest on the daily balance, your credit provider makes lots of extra money on top of the normal rate for purchases.
Bottom line is, a minimum payment means only two things – you’re lagging behind on your bills and the reason for that is you probably have the habit of overspending.
5. Flipping debt from old cards to new all the time
Accepting a card company’s line of credit and using it to pay off another balance with a higher rate is okay. However, when requesting numerous credit cards to stay ahead of rising debt is your best method of dealing with the situation, you’re probably drowning in debt and overspending is most likely pulling you under.
6. Always asking family and friends for money
Knocking on doors with your hand out is not the best feeling in the world. If friends and family members have decided to cut off their purse strings or refuse to take your calls, they’re simply tired of lending you money. You’re probably just as tired of asking and feeling guilty of overspending.
7. You look at selling your blood or plasma as a real option
No one is going to blame you for making a blood or plasma contribution as countless lives are saved by selfless donors. However, lining up to sell your precious life force so that you can buy a new outfit and matching accessories may indicate that you have a real issue with your spending habits. it’s safe to say that you have a problem with overspending.
8. Your monthly income is lower than your credit card debt
In life, there are simple financial rules you should live by. One of it is to never allow credit card debt to rise above monthly income. Pre-set controls and self-proposed debt limits are crucial in helping to keep spending from getting out of hand. They help manage your income, expenses and control your appetites for overspending.
9. There are clothes in your closet with their tags on
You’ve bought clothes but still haven’t gotten around to wearing them? Unless having so many new clothes in your closet doesn’t bother you, then you’re overspending. You see, most consumers can’t afford to hang up money in their closets. And if you charged the clothes on a credit card, you’re not only overspending, you’re paying interest for them as well.
10. You see payday or title loans as your best options for cash
Some payday and title loans and lending companies provide good services at reasonable terms regardless of what you may think of them. However, you must remember that industry loan products are short-term answers to your financial issues. Quite often, you could end up paying more than you had planned for extending the term of the loan, So read the fine print carefully.
11. You dig into your retirement account
You might think there’s no harm in borrowing from your retirement account because it’s your money anyway. About 20 percent of 401(k) plan participants have taken a loan from their account, according to the Pencil Research Council Working Paper. You may borrow up to half of your 401(k) balance, up to a maximum of $50,000.
However, that’s rarely a good idea. If you borrow from your retirement account, you’ll have to pay yourself back with interest — which can be lower than the rate of return than you would have gotten if you had left the money in the account. So really, you’re just shortchanging your retirement savings.
12. You’re always late in paying your bills
According to an Urban Institute report, about one out of 20 people with a credit file are at least 30 days late on a credit card or a non-mortgage account payment.
Paying bills late because you don’t have the cash is also a sign that you’re overspending.
If you hide your mail so that no one else can see your bills, that’s usually a clear symptom that things have gone out of hand and you are probably overspending.
14. You often buy things you don’t need
Have you ever looked through your cabinets, drawers and closet and found absolutely new and unused things just lying around your house? Do you remember buying them? If not, you’re most likely overspending on things you don’t need.
15. One job is not enough
If you’ve to work part-time on top of your full-time job to keep up with your debt, it’s time to reduce your spending so as not to overspend.
If you find yourself with any of these 15 signs of overspending, it’s not too late to rein in your spending habits. Set a monthly budget for yourself and get rid of all bad habits of spending unnecessary money or buying things which you don’t actually need.