A friend recently reflected about how, upon graduating college, she was able to make ends meet on the meager $28K per year salary she earned working as an intern at a fashion magazine. She lived in Manhattan, went out on weekends, and even found a few bucks for a contained shopping spree every now and again.

Now, eight years and a number of promotions later, she earns more than three times that starting salary. Yet, having adapted to a higher standard of living, her rise in income has not substantially changed her financial stability. She laments that she still lives paycheck to paycheck, constantly feeling broke, while her credit card balances have soared higher than ever. She is aware that her spending is out of control, but for now she is unwilling to compromise her lifestyle in order to firm up her financial position.

Sound familiar?

It should. Stories like this one are quite common, not only amongst the 20- and 30-somethings inhabiting Hoboken, but in the rest of the nation as well. Americans are spending beyond their means, and the situation is only getting worse.

Recently, the US Commerce Department released data indicating that the household savings rate in the US has turned negative for the first time in the 46-year history of this statistic. For the non-financial types, this means that the average American household actually spends more than they make! Undeniably, this is quite the troubling stat.

Many big spenders like to blame inflation. "Things just cost more than they used to, and this area is particularly expensive", says one Hoboken resident, who cited some costs that were beyond her control, such as gas and dry cleaning.

True, the New York metro area is an expensive place to live. Gas prices are up significantly. And just wait until you see those heating bills this winter. But that answer only goes so far, as most have plenty of discretionary income left over after covering the essentials.

So why are we spending so much? My very unscientific polling yielded three recurring defenses as to why this behavior continues:

#1 - Commitments- Undoubtedly the toughest to control. We live in a world full of obligation. It starts with birthday dinners and "going-away" happy hours for departing co-workers. But the bills really start to mount when the weddings begin. Engagement parties, showers, destination bachelor/bachelorette parties, bridesmaid dresses, tux rentals, wedding presents and hotel rooms - the list goes on and on. And by time the "I do"s are said and done, it is not uncommon for the tab to run into the thousands per wedding.

# 2- Keeping up with the Joneses - As our college days grow smaller in the proverbial rear view mirror, the financial disparities amongst friends seemingly grow larger. This can lead to tension within social groups that was explored in a well-known sitcom:

ROSS: I just never think of money as an issue.

RACHEL: That's 'cause you have it.

Let’s face it, making sacrifices because of financial limitations can lead to some embarrassing moments. Take a second and think about the following situations. Would you:

Pass up dinner with friends because the restaurant is too expensive?

Wear non-name brand labels or fashions that magazines tell you are out of style? (i.e. the pleated pants that those that care for me will no longer allow me to wear)

Say no to that shore house, ski house, group vacation or the Hunt, citing cash flow problems?

Use a coupon when an attractive member of the opposite sex stood right behind you?

Live in Hoboken and drive something of lesser status than a Volkswagen Jetta or Jeep Liberty?

Hell No! So we spend away, not necessarily because we feel we need to, but because society and peer pressure dictate that we must.

#3a - "Because I deserve it" (the female answer) – Americans are working longer hours than ever before. And we are taught from early on to follow that old "Work hard, play hard" mantra. So when we are not at work, we take expensive vacations, get massages, facials and manicures, eat tons of sushi and buy expensive, uncomfortable shoes that we’ll wear twice. Why? Because it makes us feel good about ourselves. And carrying this handbag makes all those long hours sitting in a desk worth it. Yes, I deserve it! Oh, and Carrie Bradshaw said it was OK.

#3b - "Because I can" (the male answer) – Channeling Bill Clinton, most male respondents gave a similar justification for spending as our former president gave for Lewinsky-ing. For many, they spend simply because they have the ability to do so. However, we should not confuse the ability with the means. Just because we spend $100 on a round of mind-erasers, $200 on dinner to impress a girl, and $300 on a pair of U2 tickets doesn’t truly mean that we can afford to do so. Instead, it simply means that in the buy-now, pay-later world of credit, we can.

Indeed we are all guilty some extent. While I admit my unrefined palate can barely tell the difference between Boone’s Farm Apple Blossom and Dom Perignon, I have more than once been part of the group ordering $200 bottles of cabernet.

Complicating the situation is the notion that being in debt is OK. "It is the American way", says one respondent. If so, then allow me to suggest that this is the one instance when you should choose to be Anti-American.

Of course, some debt is better than others. Investments in yourself or appreciable assets (things that grow in value over time) are generally considered to be wise expenditures. So it’s acceptable to consider payables such as student loans and mortgages to be "good debt". And no, charging a "Day of Beauty" to your credit card does not fall within the boundaries of "investing in yourself".

So, what is our end game? When will we stop spending and start saving?

Many live under the assumption that brighter days are ahead, believing that as our incomes grow, our paychecks will catch up with our lifestyles. However, as our heroine will tell you, frequently that annual raise simply provides further justification to spend. And for most, growing older usually means new and larger financial obligations – spouses, children, homes, education.

So I encourage you to take a look at your financial situation and aggressively act to rid yourself of debt. Undeniably, there is no better time than the present to get your financial house in order and start building a base for the future. Small sacrifices today can lead to great comforts in the future.

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-Make a spending plan and stick to it. This doesn’t need to be complex. It can be as simple as giving yourself a spending limit for the month (say, for example, 75% of your paycheck after monthly expenses). Once you hit that limit, all discretionary spending stops. Put off the shopping trip until next month.

-Simplify your finances by using only one credit card, and find one that offers the most useful reward (cash back, miles, discounts) for your needs. Shop around and be mindful of annual fees and interest rates.

-Survey all your bills and pay off higher priced debt first. For example, pay only the minimum on your student loans, which typically carry the lowest interest rates, and devote all excess cash to the pay down of credit cards with higher rates.

-Charge only that which you can pay off at the end of the billing period.

-As you pay off your other credit cards, hide them or cut them up, but don’t cancel them. Canceling credit cards can actually negatively affect your credit score. It is better to maintain, but not use the credit that has been extended to you.