You don’t have to be a jet-setter, living in luxury to spend more than you earn.

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Are you living paycheck to paycheck? If so, you’ve got plenty of struggling companies. Around 78% of American workers live paycheck to paycheck, according to a survey by CareerBuilder. And it’s not just low-income earners, either. Nearly 1 in 10 Americans who earn at least $100,000 told CareerBuilder they’re living from paycheck to paycheck.

So, how do you know if you’re living beyond your means, and what can you do about it?

1. You have lots of credit card debt

A sure sign that you’re living beyond your means is when you carry high credit card debt. It’s not unusual to charge expenses such as groceries, gas, utilities, and other necessary purchases, but if you can’t pay off most of the balance each month, you’re living beyond your means.

Living off credit cards is an expensive way to get by. The average credit card annual percentage rate (APR) is around 16%, according to And the higher your unpaid balance, the more you’ll pay in interest.

For example, if you make only minimum monthly payments of $90 on a credit card balance of $3,000 and a 16% APR, it will take more than 12 years to pay the balance off. And you’ll pay an additional $2,165 in interest.

Find out: How to Reduce Credit Card Debt in 5 Steps

2. Too much of your income goes to housing

Most people would love to have a luxurious home where they can kick back and enjoy life. However, buying a home or renting an apartment or house that you can’t afford will cut into how much money you have left for other expenses.

Ideally, as a homeowner, you should spend no more than 36% of your income on mortgage payments, property taxes and insurance, according to Forbes Advisor. If housing costs are gobbling up your paycheck, consider downsizing to a more affordable home to free up money.

Find out: 3 Big Questions to Ask Yourself Before Buying a Home

3. You pay for vacations with credit

According to a survey by CIT Bank, 77% of Americans spend money on vacations each year but 43% don’t save for a vacation.[4] And 29% have taken “extreme measures” such as taking out a loan, wiping out savings or exceeding their credit card limit to recharge in another location.

If you return home from vacation relaxed but quickly become stressed over the $2,000 you charged on your credit card to pay for the getaway, you’re living beyond your means. The best way to pay for a vacation is to save for airfare, hotel and other expenses like dining out, renting a car and sightseeing costs in advance.

Find out: 5 Ways Saving for a House Helps You Save More

4. You’re always broke

If most or all of your entire paycheck is spent immediately on bills, you need to make some adjustments. Look closely at your monthly expenses and especially at your daily spending habits and cut back where you can.

Maybe you could start with canceling subscriptions you can do without or shopping more carefully at the grocery store. You might even take a more aggressive approach such as selling your expensive car and buying an older model with lower payments, or no payments at all.

If you’re always broke, there’s another option, too: Make securing a higher-paying job your goal for 2021. Then take steps each week towards finding work that not only pays the bills but also allows you to live comfortably.

Find out: 6 Signs Your Budget Needs a Makeover

5. You have no emergency savings

Not everyone can achieve the recommended emergency savings amount of five to six months emergency savings. But if you can’t even spare enough to build an emergency fund of $1,000 so you don’t have to charge car repairs or other unexpected expenses on a credit card, you’re living beyond your means.

If you can, get started by scrounging up as little as $100 to open an emergency saving account. Then get ruthless with monthly expenses, making temporary sacrifices where you can while paying down debt to free up extra money so you can make monthly deposits to the emergency funds account.

Find out: 6 Bad Financial Habits That Keep You From Building Emergency Savings

6. You dread putting together a budget

Does facing the fact that you live beyond your means keep you from sitting down and creating a budget? Maybe you think that if you don’t have enough to pay the bills each month, there’s no point in trying to draw up a budget. Don’t get discouraged, though.

There’s help available to assist you with creating a budget – and a life – that you can afford. To get started, meet with a nonprofit credit counselor for no fee or a nominal fee. The counselor can help you create a budget and debt management plan so you can gain control over your finances again.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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