Are You Living Beyond Your Means? Are You Thinking of Buying a Home? Five Ways to Assess Your Finances

Ladies...Are you living beyond your means? Now is the time to clean up your act!

All the talk on the news lately focuses on the economic downturn and the soft real estate market. It seems as though these things have become a self-fulfilling prophecy -- the more they're talked about, the more they come true.

Whether or not we are headed for a recession, now is not the time to be living beyond your means. Now is the time to clean up your financial act and tighten your purse strings a bit, if for no other reason than to develop healthy financial discipline!

In an article this morning on Yahoo! Finance, Glenn Curtis discusses "Five Signs That You're Living Beyond Your Means".

1. Your credit score is below 600
2. You're saving less than 5%
3. Your credit card balances are rising
4. More than 28% of your income goes to your house
5. Your bills are spiraling out of control

If your any one or more of the above sounds like you, it may be time to reassess your budget to make sure things don't get worse.

Homeowners: if #4 sounds like you, it may be time to really sit up and pay attention. To figure it out, calculate what percentage of your monthly income goes toward your mortgage, property taxes and insurance. If it's more than 28% of your gross income, then you are likely in over your head.

"Why is 28% the magic number? Historically, conservative lenders have used the 28% threshold because their experience has told them that this is the rate at which the average person can get by, make their mortgage payments and still enjoy a reasonable standard of living. Certainly, some homeowners can get by spending a higher percentage on their homes, particularly if they cut back elsewhere, but it's a dangerous line to walk," according to Curtis.

If you're thinking of buying a home in the near furture and you're not sure what you can afford, discuss your financial situation with your REALTOR® and a reputable lender. While divulging this kind of information can be uncomfortable, it's absolutely vital to make sure that you can afford the house you want to buy and that you can afford the mortgage product you are stepping into. With the help of your homebuying team -- your REALTOR® and your lender -- you can make smart decisions that can make homeownership a reality, even in a tough economic and real estate market!

TAKE HEART: "As a nation, we are digging ourselves ever deeper into debt. 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."