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Living Beyond Your Means


It happens to all of us. We get set on something we want — a new set of living room furniture, a family vacation after a long deployment or a new car because we're tired of driving the one we have — and we don't stop to consider whether or not we can really afford it. We pull out the credit card and before we know it, we're off on vacation while our debt piles up.

When you spend more than what you bring in, you are living beyond your means. Although using credit cards as a form of payment has become common in this country, it is dangerous and can put you and your family at risk for foreclosure, bankruptcy or serious debt trouble. By making smart choices, you can learn to live within your means and create a positive financial future for you and your family.

Signs you may be living beyond your means

You don't have to buy designer clothes every day or get calls from creditors every hour to be living beyond your means. If you don't have a set budget and you tend to spend whenever the urge hits you, you may be living beyond your means without really knowing it. There are several signs to help you recognize that you may be living beyond your means:

  • Your credit card balance has not changed in the past year. If your balance stays the same or grows each month, it means you can't afford to pay down your debt.
  • You make purchases without considering your budget or whether or not you can afford it. Making one purchase on a credit card may not seem like a big deal. You may find yourself saying, "Oh, I'll pay that off when I get my next paycheck." But oftentimes, that one purchase may lead to more bad choices. You may get into the habit of buying things you can't afford and before you know it, you may be thousands of dollars in debt.
  • You have been charged an overdraft fee more than once in recent months because you couldn't cover a check you wrote or you exceeded your credit limit. Either one of these things could happen to someone who is not properly recording his or her purchases, but if it happens to you on more than one occasion, it may be a sign you cannot cover your spending habits.
  • You use one credit card to pay off another credit card's balance. If the only way to pay your credit card bill is to use another card or to skip a payment all together, you are making purchases you can't afford.
  • You receive notices from creditors or debt collectors.
  • You couldn't survive financially without your job's income for at least three to six months. Financial experts vary somewhat on whether it should be three months or six months or even longer, but most agree that you should be able to survive for at least three months if something causes you to lose your income - an unexpected illness, job loss, etc. You should have enough in savings to cover your expenses.
  • You're saving less than 10 percent of your pay. Saving a portion of your pay for big-ticket items, medical expenses, retirement or unexpected emergencies is an important part of being financially secure.

Ways to live within your means

The first step in attaining financial security is making a commitment to change your personal spending and savings behavior and begin living within your means. For some families, a few simple changes may be enough; for others, it may take a financial counselor to get back on track. Here are some suggestions:

  • Review your bills and find places to trim your spending. Maybe you can reduce the number of cable channels you have or switch your cell phone plan to reduce the amount you pay each month. Then put this extra money toward debt with high interest or into a savings account.
  • Take some time to think before making a big purchase. When you're tempted to make a big impulse buy, walk away for a while and ask yourself if you can really afford it. If you have to rationalize it with excuses like "Things are tough right now, but I deserve this TV," chances are you can't afford it.
  • Find inexpensive ways to feel good. For example, if you are used to going out for expensive dinners once a week, look up some new, interesting recipes online and see if you can make a gourmet meal of your own instead. If you like to buy designer clothes, maybe save up and buy a nice accessory that you can add to several outfits instead.
  • Save for big items like a vacation well in advance of the time you'll need to pay for it. If you do use a credit card, make sure to pay the balance down before you are charged any interest.
  • Check your attitude. If you have a lot of debt, but you find yourself saying things like "That job is beneath me" or "That job isn't what I'm interested in," you are making excuses to continue living beyond your means.
  • Pay in cash. You may be used to pulling out your credit card for everything, but if you pay for something in cash, it often makes you more aware of how much you're spending and you become less likely to waste money.
  • Take your emotions out of it. Whether you call it "retail therapy" or a "mental health purchase," it's easy to spend when you are sad, stressed or worried about something. It often makes us feel better for a short period of time, but getting into debt often increases feelings of stress and worry.
  • Create a spending plan and stick to it. If you're living beyond your means, reviewing how much you spend and what you spend it on can help you decide how to manage your finances.
  • Get support from the experts. To tackle a large amount of debt, you could benefit from the advice of a financial counselor. Before making a decision, contact a financial expert to discuss the best option for you. See the information below for where to turn for help.
  • Take some time to learn more about your credit card terms. The Consumer Financial Protection Bureau has a lot of detailed information on how your credit cards may be contributing to your debt.

Get assistance

The military life, with its frequent moves and deployments, presents special financial challenges for service members and their families. In recognition of these challenges, the Department of Defense provides a range of services and support to help you and your family achieve financial stability and avoid financial pitfalls.

  • Personal financial counseling is available through Military OneSource at 800-342-9647. Counselors can provide one-on-one assistance with budget development, debt consolidation (including helping you contact your creditors and negotiate late fees), housing issues (such as being behind on your mortgage payments or foreclosure) and money management.
  • The Personal Financial Management Program on your installation can also help you successfully plan for your financial future. Personal financial counselors provide education and counseling services on a wide range of topics including credit use and abuse, spending plan development, debt liquidation, financial goal setting and more. To contact your local program, visit MilitaryINSTALLATIONS.

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