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5 reasons your money will never work for you

Here are several reasons your income never seems to be enough to support your lifestyle.

By MSN Money Partner Jul 25, 2014 1:33PM

This post comes from Allison Martin at partner site Money Talks News. 

Money Talks News on MSN Money"If only my income was greater" or "If only I had a million bucks." Sound familiar? Well, you'd probably do the same thing you're doing now: Spend it!

I know the phrase "It's not how much you make, but how much you spend" is trite, but it's also true. Many Americans tend to spend as much as or even more than they earn, and finance the rest. If this weren't true, credit card debt wouldn't be through the roof.

In today's marketplace of new gadgets and toys, it's not hard to find something else to spend any excess cash on.

Here are five reasons your  $100 dollar bills © Image Source, age fotostockmoney will never work for you:

1. You won't face your situation

When was the last time you sat down and really assessed your financial situation? While I understand that you may be just one paycheck away from a breakthrough, at least for the next two weeks an in-depth assessment needs to be done. Besides, most financial emergencies wouldn’t be classified as such if humans would plan accordingly.

Start by reviewing your bank statements. Where is your money really going? Bills and a savings account or bills and waste?

Perhaps you're buying tons of groceries only to spend several hundreds per week dining out. Or maybe you're enhancing your nail polish collection each paycheck, but also continuously heading to the spa.

Regardless of where the problem lies, now's the time to get to the root of it and start making changes.

Next, take a moment to rip open those credit card statements and see how much you actually owe, along with the amount of cash you are throwing away each month on interest. If that doesn't motivate you to come up with a plan, I'm not sure what will.

What if you refuse to use any form of plastic to make purchases, yet your money disappears as quickly as it touches your hand? Keep the receipts for every purchase you make in the next 30 days. Once the time has lapsed, scrutinize your documents and you should have a clear idea of the problem areas.

Need a little help getting your spending plan set up? Check out "How to develop an effortless budget you'll stick to."

2. You lack discipline

If you want it, you buy it, even if your bank account advises otherwise. After all, you work hard, so why not enjoy life?

Well, there's a slight problem with that approach. While tomorrow is definitely not promised to any of us, adopting that mentality in your spending habits is nothing short of detrimental. Spend like a maniac now, with a reckless disregard for your wallet, and you will surely pay for it many times over later on.

And let's not forget about the emergency fund that’s dwindling as a result of your lack of discipline.

Take a look at "6 ways to game yourself into saving cash" to get back on track.

3. You aren't realistic

The opposite extreme of wild overspending is deprivation. While you may have good intentions for your money, pinching pennies could very well diminish your quality of life. And one day you may wake up and go on a spending rampage to make up for all the times you've deprived yourself.

Yes, you need to cut your spending, but going way overboard to the point that you're miserable will probably backfire. You need to treat yourself -- within reason -- every once in a while.

4. You're addicted to debt

Instead of learning to make do with what you have, you've created a posh lifestyle supplemented by any and every ounce of credit you could get your hands on. Now you have a stunning amount of debt to show for it.

I'm not suggesting that you should live in a hovel or a dive, but you must learn how to be disciplined with your own money before you can possibly manage funds you've borrowed from the credit card company. Sure, you borrowed with good intentions, but the outstanding balance quickly spiraled out of control because solid money management principles were never ingrained in you. To you, credit card debt is a normal part of life.

Still in doubt? Take a look at "10 signs you’re a credit card addict."

5. You make incorrect assumptions

You're one of those people who is always eyeing the proverbial Joneses, looking at what new car is parked at their home.

As humans, we are wired to want more, some a bit more than others. But what is your motivation? Do you really think that bright new thing will make you happy? Is your desire sincere or simply envy of a lifestyle displayed by your favorite celebrity on TV? If the latter applies to you, no amount of money will ever be enough.

Another important consideration: Things aren't always what they appear to be. The family you envy could very well be robbing Peter to pay Paul and falling deeper into debt to live in their dream home.

Is there any hope for me?

Most definitely. The first step to a solution is acknowledging you have a problem.

Then take action. Read "8 smart ways to pay off debt fast." Once you've gotten your financial house in order, you will begin to enjoy the finer things in life.

What steps have you taken to make your money work for you?

More from Money Talks News

Jul 25, 2014 3:29PM
#2 - lack of discipline is the most important.  Most people could save more if they really wanted to.  For example, they could -
1) drop the smart phone and get a "dumb" one. Save about $50 per month. Get a low-priced tablet (e.g., Kindle Fire) or use your old iPhone as a wi-fi only device. Wi-fi is available everywhere; you really don't need to pay for cell-based data plans
2) call your car and home insurance company and tell them you want to go through all your coverage because you found another carrier that is cheaper. They'll probably help you "find" 10% off or more.
3) speaking of car insurance - An expensive policy from GEICO, Progressive, etc. is not needed. You can find one usually for less than $25/month from a place like Insurance Panda. If you spend too much on car insurance from one of those big companies, chances are you are simply funding their expensive TV ads with cute animals.
4) compare what your house is really worth to your assessment. Many assessments have never been properly adjusted down to reflect the market over the last 4 years. We cut our property taxes by about 20%.
5) re-fi your 30-year mortgage to a 15. The interest rate will drop by at least 50-75 bps, more depending on your current rate. The payment may go up slightly, but it is because you are paying off your loan faster. If it's possible, get the mortgage paid off before the kids go to college. At a minimum, have it paid off before you retire.
6) review your credit card bills for all the things you are paying $10-20 per month for that you no longer need. I bet everybody has at least a couple
7) drop all magazine (paper and on-line) subscriptions. If you look around, you can find comparable content for free.
8) review your investment portfolio for ways to replace higher fee mutual funds or ETFs with lower fee ones. S&P500 funds/ETFs shouldn't charge more than 0.10% in fees. Fees may be higher for specialty funds, but they are all coming down fast. If your company 401K uses high-fee funds, talk to the folks in charge. A difference of 25 bps in fees will mean a difference of about 5% in your portfolio value after 25 or 30 years.
9) and of course the most impactful -- never carry a balance on a credit card. If you can't resist, cut up the cards.
Jul 28, 2014 12:02PM
What can one expect when their government sets such a great example.
Jul 28, 2014 9:28AM
#6. - You live beyond your means. Actually, this could replace 1-5.
Aug 16, 2014 3:37PM
well  I know We have cut every corner there is still living paycheck to paycheck.  We cant go out and we cant buy new things. we have NO credit cards. no pets.  no car bills. Just rent and monthly needed bills like electricity and landline phone and internet. (which I could get rid of) We have no cell phone. All my money goes to drs, insurances, prescriptions and things I need to stay out of pain and alive. So what do you say to that? Not all of us are living beyond our means.....  Some of us are insurance poor ad if you have a long term ailment, mind as ell say goodbye to everything you've owned in the past. I LOST everything. even my home of 27 years. hubby makes 85.00 a month too much to get any help.  So we struggle day in and day out.   Don't go anywhere except doctors, labs, work and to buy cheap food. We eat a lot of pasta and rice. The only thing we can change is to  rent an apartment in the ghetto.    
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