Spending More Than You Make

When you spend more money than you make each month you are boundto have money problems very quickly. The bad part is that mostof us never realize we are spending that much until it's toolate.

How many times have you used the credit cards to buy a TV,school clothes and supplies, fixed the car, or any number ofthings and not realized that you just exceeded your monthlyincome. You may have even realized it but thought there isalways next month.

Credit cards are the biggest culprit but they aren't the onlyway to spend more than you make. Things like payday loans or cartitle loans also come to mind. Paying $15 to use $100 for a weekdoesn't seem too bad. However, when you consider that you arepaying almost 400% in interest over a years time these loansmake interest on credit cards look like a great deal.

Normally, installment loans have a lower interest than eithercredit cards or payday loans but they can still cause problemsif you aren't positive that you can make the payments eachmonth.

I consider a house payment and the purchase of a car the onlyreal legitimate reasons for paying interest. Very few peoplehave the means to make these purchases with cash. If you aren'tcareful you can still get yourself into trouble by buying orrenting more house that you can afford or having car paymentsthat don't fit your budget.

I just recently received an email from a lady stating that herand her husband wanted to buy a new car but really didn't knowif they could afford it. This family probably saved themself alot of headaches just by asking that question. I wrote backshowing her how they could determine if they could afford thecar or not.

My answer to her question was to have her develop a budget,listing all of the other bills and expenses they have, and thensee what's left over. I also reminded her that she shouldconsider the extra costs like insurance, maintenance, etc.

Over the years I have seen people with as little as $500 a monthincome manage their finances very well while someone else with$5000 income can't make it last the entire month. It all boilsdown to planning. If you plan your bills and purchases eachmonth with the goal of not exceeding your income, you can makeit on almost any income.

About the author:Terry Rigg is the author of Living Within Your Means - The EasyWay http://www.homemoneyhelp.com/ebookadpage.html and editor ofThe FREE Budget Stretcher Newsletter and Budget Stretcher website http://www.homemoneyhelp.com. He has 25 years of experiencecounseling individuals and families concerning their personalfinances.

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