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Live within your means - Part 1

July 23, 2008

In my last post I addressed the signs that you could be living beyond your means. Now let’s start to look at ways you can start living within your means.

A sign of living beyond your means is increasing credit card balances.

If your credit card balances are rising the first thing to do is stop charging. That is a difficult thing for some people to do, especially for those who have been using credit to supplement their income. But, it is imperative to stop. The only way you can tackle your debt is to stop accruing more.

Look at what you’ve been charging. Are they necessities or wants? Necessities are things like food, water, clothing and shelter. Eliminate or scale back on the “wants” in your budget.

Buy only what you can pay for in cash.

Next, make a plan to tackle your credit card debt through some type of a repayment plan, whether it’s a plan you create for yourself or an established plan through a non-profit credit counseling agency.

Another sign that you are living beyond your means is that more than 35 percent of your take home pay goes towards your housing including mortgage or rent, taxes, insurance and utilities.

If this is the case, scale back on your housing expenses. Admittedly this can be a difficult obstacle to overcome, but it is a necessity.

Whether your own or rent, start first by looking to see what expenditures you can cut. Try to cut your utility bills by reducing your water, gas and electricity consumption. Look at what “extras” you’re paying for that could be trimmed or eliminated, like your cable or satellite package or extras on your phone.

If you rent, start looking for a new apartment with a lower rent. Take all factors into consideration such as whether your current rent and the new rent include utilities and what other financial responsibilities go along with the apartment. Do you have to pay for garbage service? Are you responsible for lawn maintenance? Make sure if you find an apartment with a lower rent payment that you won’t get dinged by other expenses that could make it more costly.

If you own, consider downsizing if possible. Obviously downsizing is more complicated for owners than renters. You should seek professional advice if you are considering selling your home and moving to a more affordable location.

Keep your eyes out for the next post which will continue with suggestions to help you start living within your means.

Written by admin · Filed Under Misc., Debt 

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