Did you know that although the median household income in 2016 was $60,000, the average American family actually owes more than $100,000 in debt? You don’t have to be a mathematician to figure out that most of the country is spending more than they make each year. Though it may seem like the whole world is in debt and relies on credit to get by, the truth is, living beyond your means can eventually ruin your finances and your life. There are plenty of stories of individuals who ended up going bankrupt and losing everything they had - including their sanity. 

The truth is, although it’s great that there are resources like credit cards and loans to help make life a bit more affordable and easy to manage, abusing those resources can put you in dire straits. Habitually buying more than you can afford and either juggling bills or rely on loans and credit cards can lead to a host of problems including but not limited to: 

• Increased debt

• Higher out of pocket costs

• Bad credit

• The inability to afford things you need or want

• Repossessions, foreclosure, lawsuits, wage garnishments, and IRS tax withholdings

• Stress, depression, anxiety

• Relationship breakups

• Bankruptcy

Though the things you’re buying may seem like a necessity or be something that makes you happy, at the end of the day, the consequences can far outweigh that temporary satisfaction.

How to Break the Cycle

When you constantly owe someone, you get to the point where it feels like you’re working simply to pay bills. No one wants to feel that way. Therefore, you need to break the debt cycle and start living within your means. Just how do you do that? There are a lot of ways you can get there, but here are a few suggestions:

Know the facts - Are you aware of how much you make and how many bills you’re responsible for? If not, now is the time to learn all the facts. This will help you to gauge how far beyond your means you’re living. Review all of your bills for the year and compare it to your annual salary. How does it measure up?

Be wise when borrowing - Even the most financially savvy find themselves in a jam on occasion. If you need to borrow money, make sure that you’re smart about it. In other words, only borrow if it’s absolutely necessary and check your budget to ensure you can repay the loan to avoid further trouble. For example, if the car breaks down, you may need to cover the repairs. Using quick cash loans can help you resolve the matter. They also provide you with time to repay them which allows you to handle your emergency and avoid incurring too much debt.

Cut out the unnecessary - Now that reality is staring you in the face, it’s time to roll up your sleeves and get serious about reducing your spending. This means cutting out the unnecessary expenses. If you’re drinking a cup of gourmet coffee every day from a local cafe, perhaps it’s time to invest in a coffee maker and beans and make it at home. If you have a new car but the payments are half your take-home pay, perhaps you should sell it and get a more affordable car or trade it in for something cheaper. Be honest with yourself and cut out everything that you don’t need. Frugal lifestyle practices can come in handy as you look for ways to live without what you believed to be a necessary expense.

Only buy what you can afford to pay cash for- Before making a purchase on a big-ticket item, review your budget. Do you currently have the money to make a purchase without having to charge it or borrow it? If not, save up until you do. There's something about living within your means, using your own money to pay for things you want that brings such joy. 

Build emergency savings - another way to make sure you’re living within your means is to have a nest egg to handle the unexpected. Start building an emergency saving account that has at least three to six months worth of expenses in it. This way, should something come up you weren’t prepared for, you can dip in your savings account instead of incurring more debt.

If you're drowning in debt like most Americans today, living within your means may seem impossible. However, that is far from the truth. If you learn to be mindful of your finances and make decisions based on the facts, you can essentially cut out the wasteful spending, increase your savings, and start investing your money in things that are really beneficial. As you begin to make some changes in your financial habits, you’ll start to notice a difference not only in your checking and savings but in your mood as well.