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None of us set out to live a life we can’t afford.

A car loan here, an unexpected emergency there, and a couple swipes of the credit card later—we’re screwed.

And we have no idea how it happened so fast.

Can you relate?

But here’s the deal:

If you can spot these red flags early on, then it will prevent major financial disasters for you down the road. So what are the signs you’re living beyond your means?

1 | You Rely on Credit Cards for Vacations

woman relaxing on the beach

Have you ever used a credit card to cover the cost of a vacation? It’s tempting, isn’t it?

The typical vacation costs $1,145 per person. So a family of 4 would need $4,580. But 40% of Americans don’t even have enough money to cover a $400 emergency.

So if you’re still paying off a trip several months after you’ve gotten home – you should ask yourself:

Is it worth it?

Here’s a rule of thumb:

If it will take you more time to pay it off than the use you’ll get out of it, then you can’t afford it. Start saving money in a vacation sinking fund instead.

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2 | You’re Not Saving While You Spend

woman holding cash


When it comes to buying things you need – you might as well save money doing it.

Do you like to keep things simple? Maybe you don’t always have time to clip coupons. Or search for the best deal.

My advice?

Use a cash back app called Rakuten. It’s an effortless way to get the biggest bang for your buck 

Here’s what you do:

Sign up for a free Rakuten account and use the search bar to find the retailer you want to shop with.

For my visual readers, here’s how that looks:

rakuten homepage

As you make purchases, you’ll earn money back. And Rakuten will either send you a check or deposit that money into your Paypal.

3 | You Have No Emergency Fund

piggy bank upside down in water

If your first thought is, “Emergency fund? What’s that?” then it’s a clear sign that you’re living beyond your means.

Here’s the deal:

Most financial experts agree that you should have an emergency fund. If you don’t, you leave yourself vulnerable to taking on new debt when an unexpected expense pops up.

I had to learn this lesson the hard way. In the same year, I had two major expenses pop up. They cost me a few thousand dollars.

Guess who didn’t have an emergency fund?

But it taught me a valuable lesson about money: It’s not a matter of if emergencies will happen, but when.

So start by saving $1,000 as your starter emergency fund. Do whatever you can to make that happen:

Work overtime, sell old stuff, cut expenses, and use bonuses and tax refunds to your advantage.

Next time an emergency hits – because you and I both know it will – you’ll be so glad you did.

4 | You Settle for a High Interest Rate

bills laying on envelope

If you can’t afford to pay off your balances completely, you still have options. Don’t just settle for a high-interest rate.

I recommend using a company like Credible to lower your rates for you. Credible offers two free services:

1. Student Loan Refinancing
2. Personal Loans
What is student loan refinancing?
When they refinance your loans, they match you with a better loan with a lower interest rate. A lower interest rate will save you hundreds – if not thousands – over the course of your loan.

And according to their research, Credible users save an average of $18,886 over the life of their loan.
If you have multiple loans, this means they’ll combine everything into a new, single loan. This makes keeping track of your bills simple.
(You can also refinance if you have just one loan)
What are personal loans?
Personal loans are ideal for credit cards and other types of debt. If you carry a high-interest rate on your credit cards, for example, then you can move that balance over to a personal loan.
Bottom line? Know your options. Don’t stay stuck with a bad rate. Do what you can to lower it.
Note: You can read more about Credible in our Credible Review

5 | You Count Your Chickens Before They Hatch

pile of money

Do you plan your finances based on the money you’ll probably have soon-ish or bonuses you should get?

This can leave you sh-t out of luck if something unexpected happens.

Jobs can be lost, raises and promotions can be delayed, and refund checks can be substantially lower than what you might’ve thought.

If it’s not in your hand or your bank account, then it’s not yours. It’s really that simple. Only count your money when you have it.

6| You Don’t Have a Written Budget

woman budgeting

Having a written budget is one of the most important steps towards financial freedom.

If you make budgeting a priority, you’ll have a much higher chance of winning with money. 


Because when you write your income and expenses down – you start to identify the small leaks in your spending. It might be a daily coffee run or a high cable bill.

Whatever it is, you can’t measure it unless you track it.

So make a budget and stick to it (because, after all, a script is no good if it isn’t followed.)

7 | You Pay Your Bills with Credit Cards

credit cards laying on table

This is one of the clear signs that you’re living beyond your means. But, it’s a trap many people fall into.

Do you “float” your lifestyle with credit cards? Are you guilty of transferring balances from one card to another?

Do you use plastic to cover basic necessities like groceries and utilities?

Many people consider this the new normal. Except, it shouldn’t be.

People who win with money don’t use plastic to inflate their lifestyle. I credit a huge part of my financial success to this book.

And in that book, Author Erik Wecks says a wealthy man once told him, “I don’t borrow money – I lend it.”

The wealthy man knew that borrowing money was a bad idea because of interest. Instead, he lent money to other people and charged them interest for it.

You see, wealthy people know that interest rates can suck you dry.

And they didn’t get to where they are by keeping the never-ending payments.


Borrowing money will lead you down a path of perpetual broke-ness and unhappiness. So stop the cycle.

8 | More than 30% of Your Income Goes To Your House


Don’t we all want that nice house in that great neighborhood? Isn’t that a part of the American dream?

In 1960, the average house size was 1,289 square feet. Families were also larger back then (baby boomer generation)

Today, the average house size is 2,641 square feet. We all want more and more, until “more” becomes something we can’t afford.

Your house payment should be no more than 30% of your take-home pay. The same goes for renters.

Research shows that the average person can pay 30% or less towards housing and still enjoy a reasonable standard of living.

So give your budget room to grow:

Are you planning on having kids?

Do you want to go back to school?

Will you change careers?

Are you getting married?

Think about these things before you spend too much on a house and fall into the trap of living beyond your means.

9 | You’re Considering a 30-year Fixed Mortgage

man and woman getting keys to new house

It’s never a good idea to base the amount you *think* you can afford on a 30-year fixed mortgage.

There are several reasons why this is a bad idea, but interest is the main one.

In the long run, you’re paying the bank twice as much in interest payments. Don’t do it just so you can have extra spending money in the short run.

If you can’t afford the payments on a 15-year mortgage, then you can’t afford the house.

10 | You Run Out of Money Before Your Next Paycheck

woman writing in her planner

We all know someone like this. They have too much month left at the end of their money.

They pay overdraft fees.

They live paycheck to paycheck.

People who live this way usually think they can’t save money or cut expenses.

They’ve become used to their habits. 

If this is you, then I encourage you to take a hard look at your spending habits.

Create a bare-bones budget and make your lifestyle fit your paycheck. Start small by trying to find at least 2-3 expenses to cut from your budget.

  • Pull the plug on cable and switch to Amazon Instant Video instead.
  • Don’t forget to cancel the free trials you sign up for.
  • Find a good coffeemaker and brew your coffee at home.
  • Cut the unnecessary subscription services that you don’t really use.

11 | Your Debt Has Remained the Same for the Past Year

man holding credit card

Are you still facing that whopping credit card bill?

Haven’t made a dent in your student loans?

This is one of the most obvious signs that you’re living beyond your means. This is the point where you have to become sick and tired of being sick and tired.

There are two popular debt payoff methods:

    1. The Debt Snowball

    2. The Debt Avalanche

If you need help picking a debt payoff plan, read this first:

Debt Snowball vs. Debt Avalanche – What’s the best one for you?

Then commit yourself to becoming debt free.

12 | You Have Little to Nothing Saved for Retirement

man and woman looking at bills

34% of young adults have nothing saved for retirement.

Of the ones who do have retirement savings, 21% have less than $10,000.

There’s no pension for our generation, guys.

We must save for our own retirement.

Don’t ignore the fact that someday, you might not be able to work. And besides, who wants to be 75 and still stuck at a 9-5?

Don’t worry, you’ve got this. If you don’t know where to start, I recommend reading this.

(And in 30 years when you’ve saved over a million dollars in your retirement – don’t forget to come back and thank me.)

13 | You’ve Considered Digging into Your 401(k)

pink piggy bank

Did you know if you google “401k” one of the most popular searches is “taking out of 401k for a house”

Yikes. Why do people think that’s a good move? 

Here’s the deal:

If you take out money from your 401(k) before you’re 59 1/2, then you’ll have to pay an early withdrawal penalty plus income tax.

Don’t steal from your future self just to make current ends meet. Emergencies happen, and that’s what your emergency fund is for.

14 | You Go into Debt For Something You Could Do Yourself

man mowing lawn

Do you go into debt to pay someone for a job you could’ve done yourself?

Are you too busy to mow your lawn, clean your house, wash your car, or paint your nails?

Some expenses are unavoidable but a person who is in debt can’t afford to spend money on skills they already have.

Instead of paying someone else to do a job for you, try doing it yourself. This is one of the easiest tweaks to make when you’ve been living beyond your means.

15 | You Spend Your Paycheck Right Away

woman holding money

The difference between someone who is smart with their money and someone who isn’t – is what they do with their paycheck once they get it.

If your first inclination is to spend your check on a want versus a need, then it’s a sign of a larger issue.

Shopping may bring short-term happiness, but in the long-term, it’s a fast way of staying broke.

Wait at least 48 hours before making major purchases. That way you’ll give yourself time to think twice.

16 | You Avoid Opening Bills

stack of bills

Let’s be honest, when you know you owe money – it can be really hard to face the bills.

But when you’re trying to get your financial sh-t together, this is usually the first step.

You have to face the financial facts if you’re trying to better your situation. Get a clear idea of how much you owe and to whom you owe. Then, add up what you have in savings.

Then with the help of a budget, you’ll be able to start your journey towards financial freedom.

17 | You Hide What You Buy

woman holding shopping bag

If you feel like you should hide what you buy, I want you to ask yourself, “Why do I feel the need to do this?”

It’s probably because you feel guilty about your spending habits.

Living within your means isn’t restrictive when you budget your money. If there’s something you really want, then just make sure to budget for it.

There’s no material object worth trading your peace of mind and financial happiness for.

18 | You Ask Someone to Hold Your Checks Until After Payday

calculator and bills

This makes it clear to you (and everyone else) that you’re living beyond your means.

And that’s not the kind of impression you want to make. So this is what an emergency fund is for.

Who knew that an emergency fund and budgeting could solve so many financial problems?

19 | Your Bare Essentials are Literally Bare

cutting board

If you’re having to eat rice and beans every night just to afford the new iPhone, then I probably don’t have to tell you that you’re in over your head.

But, you’d be surprised at how many people skimp on basic essentials like food, shelter, and transportation just so they can make low-value purchases.

Those are the people who go into debt to buy a car that they can’t even afford to fill up with gas.

What sense does that make? Prioritize your spending with a budget.

(So if you haven’t realized yet, there’s really no way around an emergency fund and budget.)

20 | You’re Scared of Being Judged by Your Friends

four guys hanging out

Someone once told me that social media was the devil to their wallet.

I think they have a point.

Do you ever find yourself buying something because you saw it on social media and just had to have it?

Or worse, buying things because you felt pressured? Don’t go broke for someone else’s approval.

If there’s one thing I learned about the Joneses – it’s that they’re broke too.

Be a role model for your own financial life.

Let me know in the comments, have you caught yourself living above your means?  And as always, thanks for reading.

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When it comes to financial planning, it's important to live within your means. You have to learn how to control your home budget in order to save money and live frugally. These money tips will help you organize your finances and budget your money wisely. #personalfinance #frugalliving #daveramsey


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