Wednesday, July 22, 2009

Signs That You're Living Beyond Your Means

Investopedia: As a nation, we have a long way to go before we reach any sort of collective financial responsibility. To avoid becoming part of the gloomy bankruptcy and foreclosure statistics, it's important to measure your financial health regularly. The five signs presented here are not a death sentence; instead, they should be seen as symptoms that allow you to diagnose a problem before it gets worse.

SHOOT: Face the reality of your finances, before you're wiped out. Bad decisions now will be punished, so be disciplined, and try to make good decisions. They'll be tough and less convenient than you're used to, but you might emerge as a survivor.
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Young woman looking worried at her piggybank (iStockphoto)
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You are Saving Less Than 5%

In 2006, the average rate of personal savings was an astonishing -0.5%, according to the U.S. Bureau of Economic Analysis. That means that not only were we spending all of our income, but also that a good number of us were also dipping into personal savings. This was the worst savings rate that Americans have recorded since 1933 when it was -0.7% during the Great Depression. The rate bounced back into positive territory in 2008 (Figure 1), and climbed further in 2009. If you haven't jumped on the saving bandwagon, now's the time to do it.

Your Credit Card Balances are Rising

If you are one of those people who pays only the minimum due on their credit card balance each month, or if you send in only a small contribution toward the principal balance, then you are most likely in over your head.

More Than 28% of Income Goes to Your House
Your Bills are Spiraling Out of Control
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