11/02/2012 07:16 pm ET Updated Jan 01, 2013

9 Signs You May Be Kidding Yourself About Money

Are you kidding yourself about money? If not, chances are you know someone who is. U.S. personal savings rates remain in the low single digits, and overall consumer debt is at an all-time high.

The Great Recession was supposed to have shown the dangers of overspending, but some Americans' financial troubles may relate more to psychology than a lack of knowledge. Reining in a budget can be unpleasant, and people often go into denial in the face of money problems.

Here are nine signs you may be kidding yourself about money.

1. Your debt has increased sharply over the last year

Excluding your mortgage, do you owe more money now than you did a year ago? One problem is that low interest rates has made debt seem more affordable, but if you limit your debt only by what payments you can afford to make, you are kidding yourself about ever being able to afford to retire. As long as you are paying interest rather than earning it, you are falling behind rather than getting ahead.

2. You bought a new car to save on gas -- but your payment rose by $300

With high gas prices, fuel efficiency is a popular reason to buy a new car. However, if you have raised your payments and/or extended the term of your debt in the process, those savings at the gas pump may be a false economy.

3. You buy a house you can barely afford because you expect your income to rise later

For a young person signing on for a 30-year mortgage, it's natural to assume the payments will become more affordable as your income grows. However, if you look at the economy of the past dozen years or so, it's clearly no longer safe to assume that the natural career path is onward and upward. Don't buy a house that you risk getting squeezed out of.

4. You borrowed money to take a vacation

As a rule of thumb, the time it takes to pay off a debt should not last longer than the life of what you purchased. You'll have a hard time building wealth if you take on long-term debt for short-term purchases.

5. You justify what you buy based on what your peers are buying

It's natural to take cues from friends. But it's also financially risky, because each household may have very different financial circumstances. Also, considering the scope of the U.S. debt problem, you may want to rethink whether your peers are good role models in the first place.

6. You aren't saving for retirement because you're still young

Retirement? That's for older people to worry about ... and worry is what you'll end up doing if you take that attitude. The sooner you start saving, the longer your money will have a chance to grow by compounding, so early in your career is the best time to start.

7. You quit your job without having a replacement lined up

According to the Bureau of Labor Statistics, the average duration of unemployment these days is about 40 weeks. So think long and hard about whether burning through savings for 40 weeks is worth the satisfaction of saying "I quit."

8. You justify having no savings because you've been too busy paying down debt -- for the past 10 years

This is a bit like people who are always on a diet but never seem to lose any weight. If you don't see results, you need a new plan.

9. You think your spouse's terrible money habits are "cute"

Maybe you aren't the source of the problem. Maybe you're just an enabler. Either way, household finances are a shared responsibility, and financial habits that could hurt the whole family need to be addressed.

Stopping the pattern

Recognize yourself in any of these examples? Don't feel too bad -- you're definitely not alone. However, the time to stop kidding yourself is now. The sooner you begin seeing your finances clearly, the sooner you can begin to correct them.

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"9 Signs You May Be Kidding Yourself About Money"