Living beyond one’s means can result in an assortment of problems, from being unable to get a loan to being denied a rental contract.
The first sign of a problem can be having too much month left at the end of your money, Don Noller, president of Marion National Bank, said.
Debt-to-income ratio is important when one’s credit is being considered, Noller said.
“They need to keep it under 40 percent,” Noller said.
Noller said if one’s spending is out of whack, there are steps they can take to rein in spending.
“Some of it to me is, they need to sit down and make out a budget, then follow it – including savings,” Noller said.
The place to start is to take a close and realistic look at where they are spending money.
“They need to look at everyday habits and see where they can save some dollars,” Noller said.
A frequent example is going out to eat often when it’s less expensive to cook at home. It’s also not necessary to buy a new cell phone every time a new generation of the phone goes on the market, he said.
A novel idea he’s heard others recommend is for people to put their credit cards in water and freeze them so they must think for a long time before they use them. He’s not sure the magnetic strip would still work after that, he said.
“I’m not against people having credit cards, but to me they’re for emergencies or online purchases. You have to be wise with it,” Noller said.
Gambling money at a casino is a common waste of household money, Noller said.
“Take a budget and stick to it,” Noller said. “When the casino workers know people by name, that’s not a good thing.”
Noller acknowledges it’s not always easy to avoid practices that waste money. Sometimes a person is addicted to a behavior such as gambling and can’t just stop.
“It just snowballs and a budget is not going to help with that,” Noller said.
One additional suggestion is to put cash in envelopes marked for specific expenses, including emergencies. That’s a practice that works well for those who do it, Noller said.