Five Signs You’re Living Beyond Your Means

The following is summarised from the Retirement Commission website and dated 12 July 2010

“During the nineties and noughties, New Zealand and developed countries around the world experienced an explosion in credit and personal debt. But times have changed, and frugality is back in fashion. By necessity the 2010s are likely to become an era of budget balancing as attempts are made to reduce debt from both a government and individual level.”

A powerful opening statement for this interesting item on the Retirement Commission website. It goes on to state that the average New Zealand adult has debt of around $4,400.

• Collectively Kiwis owe more than $12.7 billion in personal debt. $5.2 billion of this is in credit card debt and $3.8billion in hire purchase schemes and store cards.
• This doesn’t include the $167.9 billion we owe in mortgages and housing loans, or the $10.2 billion owed in student loans.

Want to check if you are overspending? Sorted (Sorted.org.nz) has identified five warning signs to identify this. Is this true for you?

1. Is your credit card is maxed-out, or close to it, and you’re only making the minimum payments?
2. Do you have difficulty paying all your bills at least once every three months?
3. Do you have no idea how much your regular bills are every month?
4. Do you have no idea how much spending money you have every month?
5. If you lost your job, you would be in financial trouble within a month?

If you answer yes to three or more of these questions chances are you need to get your spending back under control.

• The first step is simple – make a budget so you can work out whether you’re spending more than you earn.
• Then make a plan to reduce your debt more quickly and start saving.

This is useful information for all of us as we plan for our retirement and also plan to reduce financial stress and avoid wastage of hard earned dollars on high interest rates.