Do you think that you don’t have a spending problem? In this post, I’ll talk about 5 signs you have a spending problem, some of them are very obvious and others are signs that you may be ignoring or thinking that are okay to have.
Believe it or not, one in five Americans spend more money than they earn and millions more struggle each and every day with overspending
In this post, I’m going to tell you the five signs you have a spending problem
1. you keep your purchases Secret
One of the biggest signs that you have a real spending problem is that you’re hiding your purchases from others.
If you’re married and maybe that you were hiding it from your spouse and if you’re single it could be hiding it from your roommate or friends. You see the concealment of your purchases is really just you avoiding the feeling of guilt and disappointment that comes to spending irresponsibly
2. you use payday loans
It seems like payday loan centers are on every corner and there is a good reason for that. millions of Americans use Payday Loan services on a regular basis but this habit is absolutely terrible for your financial health due to their extremely high borrowing costs.
believe it or not, the annual APR or annual percentage rate on a payday loan can range from 391% to 521% which is tens of times higher than the already ridiculous average APR of credit cards at 17.73%
And to compound this lending issue, payday loan lenders will let you roll over the balance of a loan for a fee if you can’t repay the full amount when it’s due meaning that you fall deeper and deeper into debt with a little to no hope of paying it back.
3. you only pay the minimum on your credit cards
If you’re maxing out your credit cards and you can’t pay off your balances every month then chances are that you have a serious spending problem.
Normally does maxing out your credit cards put you into nearly inescapable debt but it also damages your credit score making it that much harder to secure a mortgage to buy your home.
Now, you may be thinking well I always pay the minimum so my credit score will be fine right? And while this is true for the most part, only paying the minimum on your statement balance still leaves you in a bleak financial situation.
For example, if you had a $1,000 balance on your card with a 16% APR and made a minimum monthly payment of $25 on your balance it would take nearly five years to pay off your debt with almost half of that being interest.
4. You take money from your retirement fund
You might think to yourself I’m far from retirement it won’t hurt if I take a few bucks out of my fund but you would be dead wrong.
The first reason is that every time you withdraw money from your 401k the withdrawn amount will be added to your income for the year meaning it’ll be increasing your annual tax burden. What’s likely and even more harmful is that once you withdraw the money you’re rather unlikely to return it meaning that come age 65 you are left with much less than you should have had.
Sadly about 20% of 401k plan participants have taken a loan from their account and more than likely have spent it on frivolous goods due to their chronic spending problem.
5. You have no savings
Probably the most obvious sign that you have a spending problem is that you have zero savings and if this sounds like you, just know you’re not alone.
On average almost 70% of adult Americans have less than $1,000 in savings meaning that they are one car break down or emergency away from being in a serious financial crisis.
This lack of savings is usually accompanied by maxed-out credit cards which are further indications of a serious spending issue.
Tips that will help you if you have a spending problem
My friend, if any of these spending symptoms resonate with you don’t worry because I’m now going to share with you three proven ways to realign your spending problem and have you back on your financial feet in no time.
- the first tip is to create a budget
Every month breakdown how much income you expect to earn and below align all the expenses you plan on incurring.
if all your expenditures seem reasonable and your income exceeds your cost then you’ll be one step closer to squashing your spending problems.
- Cut up your credit cards
Spending on credit is far too easy and it’s one of the main reasons people overspend.
You see when you pay by credit card you don’t really notice how much everything costs but luckily we can change that. Instead, every week take out just enough cash to cover the expenses that aligned in your budget.
This not only limits how much you can spend but it will also allow you to gain a new appreciation for the value of your money.
- Get an accountability partner
Find an accountability partner it could be a friend, a family member, or a co-worker. designate someone in your life to be your money coach who will follow up with your spending each and every week.
This way if you do overspend you and your coach can discuss your mistakes and get you back on track to living your best financial life.
You can also read 6 Common money mistakes that you need to be aware of and How to save money and be financially successful to learn how to better manage your money and get rid of your spending problems.
Thanks for your time
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