Author: Ayanna Fultz
So ‘tis the season of large tax refunds and hilarious memes hinting at very random and extravagant purchases. But what happens when that extravagance doesn’t end; when we’re struggling to maintain a lifestyle we can’t afford? Here are the top 5 signs “you doing too much” and how to fix it:
Sign #1: Your credit cards are maxed out.
In the words of my Granny, “Credit cards are for emergencies. It’s not free money.” It’s short-term borrowed money. If you have little self control and you know that about yourself, make sure your credit card(s) all have low limits. (No more than a $1000 credit limit.) I know life happens but that’s what makes credit cards so risky: Credit cards are a “free” and easy opportunity for immediate gratification. Don’t want to use your money in your checking account to pay your phone bill? Credit card! Want to go on an impromptu shopping spree – just because? Swipe the credit card! Before you know it, that thang is smoking thanks to swiping it so often!
Let’s Fix It, Sis!: The rule of thumb is: Never use more than 30% of your credit limit. So if your credit limit is $300, you shouldn’t use more than $90 on that particular card. For a credit limit of $500, use no more than $150. Why? Credit bureaus want to see that you’re using credit “responsibly”. To them, maxing out your credit card only means that you’re improperly budgeting your finances and are dependent on something that should only be used on occasion. Maxing out your credit cards and/or not paying your monthly repayment installments on time and as agreed will cause your score to drop tremendously and we don’t want that!
Sign #2: You’re drowning in overdraft fees.
”OMG! I forgot that was coming out of my account today!” We’ve all been there… and I think it hurts the most when it’s a 99 cent charge from Apple or another frivolous expense. (Insert eye roll here) Overdraft fees are the devil and if you’re not careful, your checking account will forever be in the negative.
Let’s Fix It, Sis!: I have two solutions here: First, try employing stricter budgeting techniques. Write down what your bare living expenses are. Not your wants but your needs: housing, utilities, car note, insurances, food, etc. Then allow a conservative amount for miscellaneous expenses: after work happy hours, shopping, Starbucks runs etc. It may be a good idea to have 2 separate checking accounts: one for your needs and another for your wants. Once the funds in your wants account is gone, “Issa wrap”. Another technique that’ll work here is to turn on overdraft protection for your checking accounts. That way, purchases will be declined automatically. It’ll help you better budget and in the event you’re down to you last dollar, you don’t have to worry about Apple or Amazon coming to snatch it away and on top of that having to pay a $30+ overdraft fee.
Sign #3: You have no savings.
“Savings account? What savings account?” Did you know that 32% of Americans have no savings at all? And that’s down from a staggering nearly 40% in 2017. There’s so many culprits to blame here: student loan repayments, unemployment, low and unequal pay, etc.
Let’s Fix It, Sis!: Make saving fun! Set goals for yourself. You can establish a savings account for your next vacation… a savings account for a new car… a savings account for a new home and so on and so forth. There are also some pretty cool apps to help you save: Qapital, rounds up change to nearest dollar and automatically moves it into your savings account, and the Digit app analyzes your income and expenses and comes up with an approximate figure of what can be saved each month. Likewise, if you feel you’re not making enough money to save, handle expenses and have a little fun, get a side gig to supplement your financial efforts. Make it fun!
Sign #4: Your mortgage or rental payment far exceeds 30% of your monthly income.
In real estate it’s called, “house poor” and it’s such a miserable place to be. Working to only pay for housing and then struggle to pay utility bills and other pertinent expenses is an unnecessary hassle and can begin to chip away at your happiness. A home is supposed to bring you happiness and serenity not stress. Eventually and unfortunately, you’ll reach your breaking point, begin to despise the home, and either be on your way to eviction or foreclosure, two financial stains that can ruin your credit for a very long time.
Let’s Fix It, Sis!: It’s important to get ahead of this. You’re either going to have to find a more affordable rental situation, refinance your home in hopes of getting a lower monthly payment or sell your home. Now all these changes will be uncomfortable but as the old folks say, “Peace of mind is priceless.”
Sign #5: You are constantly battling with that “Keeping up with the Joneses” inner demon.
Can we be honest here? Very few people “got it like that”. There are so many fakers out here and you need not be one! My mom always says “You never know what the next person had to do to get what they have.” So that’s why it’s always best to stay in your lane; focus on your goals; and make sh*t happen… and that’s on period! “Keeping up with the Joneses’” never pays off; I can assure you but the good news is “balling on a budget” is a real thing and there’s so much to be enjoyed that doesn’t cost much. As they say, “The best things in life are free!”
Let’s Fix It, Sis!: I so wish I could give you hardcore financial advice here but, hunny, this is an inner problem. The first step to staying in your own lane is being grateful for how far you’ve come and trusting the process for where you’re destined to go. I know sometimes it can be hella hard thanks to the influence of social media but once you get tired of constantly being under unnecessary pressure to keep up, you’ll make a change. Someone in this world is depending on you to carry out your purpose so that they can realize their own. That can’t happen if you’re living a facade while draining your bank accounts.
The moral is: Happily do too much and splurge a little on occasion (and when you can afford it) but reel that ish in when it’s time. Hell, we’ve got goals to reach… but enjoy the journey; for this life is a marathon and not a sprint. ??