5 Signs You’re Living Beyond Your Needs, According to Suze Orman

SplashNews.com / Shutterstock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

You might have bad spending habits that you don’t realize at first. Maybe you still find ways to barely scrape by each month or use credit cards to cover shortages. But without addressing the issue, you can remain stuck in a costly cycle that hurts your long-term financial security.

A March 2025 episode of the Suze Orman Show covered five common signs you’re likely living beyond your needs. Find out if you’re doing these things and how to take action to get out of the trap.

Paying the Minimum on Credit Cards

Orman said it’s a major red flag if you’re charging things to your card and making minimum payments rather than fully repaying the balance each month. According to Federal Reserve data, about 11% of consumers of large banks were doing this in the fourth quarter of 2024.

While it seems like the easiest short-term option, it’s dangerous because you’ll pay more interest and take longer to pay off the balance. For example, if you owed $5,000 with a 21% APR and a $100 minimum payment, you’d spend just over 10 years paying that card off and losing around $7,200 to interest.

Look for ways to stretch your budget to contribute more toward paying off existing credit cards and rethink your spending to avoid more debt.

Being Late on Payments

Not properly paying your debt payments, utility bills and other monthly payments indicates you’re stretching yourself too thin and need to rethink your money management strategies.

Orman explained, “You’re constantly late with those payments because you’re waiting for this check to clear, for this money to come in — you’re juggling everything, so you’re always late.”

Not only can late payments make you rack up fees and potentially pay penalty interest rates, but they can even lead to service cutoffs. Plus, your credit score may suffer once payments are 30 days late; Chase indicated a potential drop of around 100 points for one late payment.

Having a Bad Credit Score

Orman said, “If you look at your FICO score, and it is bad — in the 600s, in the 500s — that is an indication to you that you have been irresponsible with your money.”

Many bad money habits –including making late payments, having high balances or being in collections with some creditors — can lead to poor credit. As a result, it can become harder to get new credit, good interest rates, affordable insurance premiums, apartment rentals and jobs.

If you’re in this situation, work with creditors to get back on track for any delinquent accounts and lower your expenses to put more cash toward clearing the balances. You’ll also want to better manage your finances so that mishandled debt doesn’t damage your credit score again.

Taking Out a 401(k) Loan

According to Orman, borrowing funds from your 401(k) often means you’re spending on your wants versus just your needs, which you should use your paychecks for.

401(k) loans are appealing since you avoid taxes and penalties as long as you repay them properly. But you risk getting off track for your retirement savings goal, and the IRS noted that your loan can become a taxable distribution when not repaid on time.

An emergency fund, health savings account or another cash account gives you a better safety net if you need help covering an important need. But be careful you’re not just using that money for wants.

Asking Someone To Cosign

Orman said needing a cosigner for a house, car or other purchase is a red flag for your financial health. It usually means your income or credit isn’t good enough to get the loan alone, which indicates you might not be managing money well or could be taking on unmanageable debt.

Besides the risk you take by adding more debt, the cosigner is left legally and financially on the hook for your loan if you struggle to repay it. They can lose their good credit score or have to pay off your debt out of their pocket. 

Rather than put you both at risk, wait until your financial situation is stable enough to get approval on your own. Then, make sure you can comfortably manage the new payments.

Sources

• Suze Orman’s Official Channel, YouTube, “5 Signs You’re Living Beyond Your Needs.”
• Federal Reserve Bank of St. Louis, “Large Bank Consumer Credit Card Balances: Share of Accounts Making the Minimum Payment.”
• Chase, “When do late payments show up on your credit report?“
• IRS, “Considering a loan from your 401(k) plan?“

Share This Article: