Overspending or spending more than one earns, is a path to financial instability. Depending upon which survey you read, anywhere between 42% and 63% of Americans spend more than they earn. This occurs at all income levels. For those who are not spending more than they earn, on average, Americans are saving only 5.5% of their income. Certainly not enough to sustain themselves should there be a change in their lifestyle, such as a child going to college, losing one’s job, moving to a bigger home, divorce, death of a spouse, supporting another family member such as a parent or an adult child, or retiring.
Signs of Overspending
- Always carrying a balance on your credit cards.
- The outstanding balances are increasing on your credit cards.
- Loss of sleep due to worrying about your bills.
- Tension in your marriage due to financial stress.
How to Find Out If Overspending Is a Problem:
- Make three columns on a piece of paper – Name of credit card, last month’s balance due, this month’s balance due.
- List all of your credit cards.
- Write down the balance due from last month’s statements.
- Write down the balance due from this month’s statements.
- Total each column and compare.
If this month’s balance is higher than last month’s balance, it’s time to
Other Questions to Ask Yourself:
- Are you charging everyday purchases, i.e. groceries, household necessities to your credit card instead of using a debit card or cash? (This is only OK if you pay off the balance monthly.)
- Have you used your overdraft protection on your checking account?
- Have you bounced checks because there was insufficient funds?
- Have you refinanced so you can roll your credit card debt into the new mortgage to eliminate your outstanding debt? You may have refinanced more than once to eliminate your debt.
- Are you only paying the minimum due towards your credit cards?
We have clients who have refinanced several times; each time rolling their outstanding balances into the new mortgage. These clients all admit that they did nothing to change their behavior and that is why they are coming in to meet with us.
What We Can Do for You:
- Formulate a realistic and reasonable plan on how to pay down your outstanding credit card debt through credit counseling.
- Help you understand your current choices and lead you through the changes you choose.
- Help you shift your relationship with money that has been molded from your life experiences.