A very straightforward question: How do you live below your means?
It is a very common term that is thrown around all across the personal finance world and I have been having an extremely tough time coming to grips with this idea. So I pose this question to you with the hopes of getting real examples to help me analyze my current situation and hopefully other readers can benefit from the insightful comments of everyone out there!
What I would like you to do is tell us what it means to you to "live below your means". Is it something that you have grown accustomed to? Or did you really have to work at it to reach the point you are at? Or are you not even close to that point at all?
I will start off with myself. To me, living below your means describes a mentality to do less with the goal of having more later. Maybe this is why I struggle with this idea so much because I have always been set on living every second of life concentrating with right now. This philosophy often gets me in trouble with respect to my personal finance. I am saving for the future, just not enough. I do have future plans, I just lose sight of them very often. Living below your means is a disciplined mindset that forces you to keep your future goals on your brain at all times. A disciplined person is cognizant at all times about how every single one of their actions affects the outcome of the future.
That may sound a little profound of an answer but I tried. What do you want from me? I work in I.T. people! Anyways, lets here some feedback, tell me your stories about how you live below your means and what impact it has in your life. As my boy Joeykrak would say "SPEAK ON IT!!!" Have a good day people and be easy.
Wednesday, October 1, 2008
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8 comments:
From a financial standpoint I believe it means knowing you could live at the next level of a quality of life, but substituting that for a more safe and comfortable lifestyle at where you are. For example, if you could afford a larger house, or higher rent, but choose to have a smaller house, pay less rent than you could afford because you know you will have more money for other things.
Craig
www.budgetpulse.com
yeah dawg, it's all about living comfortably knowing you have the means to do more if you should choose.
it doesn't have to do with "living less" or anything like that in my opinion as i can do a lot w/out blowing money, but more about the mentality as you mentioned.
It sure doesn't come easy or right away though, builds up over time i think - but only once you make the active choice to do something about it. i hear alot of my friends saying they're working on it, and then never change a thing. i think they just like to complain ;)
but good post bro, makes ya think for sure.
I live below my means by allocating first dollars in each month to long term financial goals (retirement, mortgage payoff, etc.). What is left I spend as I wish without detailed budgets but also without use of credit.
to me, it would be letting go of things that you can afford so you can live better later. its pretty hard and takes a lot of mental adjustment.
whatever you "it" is, find it @ www.yourfindit.com
I'll have to agree with Craig — it's living at a level below where you could (with certainty) afford to be living at.
For me, I personally enjoy 2 to 4 peanut-butter jelly sandwiches a day, never eat out (almost anyways), and use as little water/electricity/utilities as possible.
To me living below my means simply means delayed gratification. The longer I wait for something the more my desire for it increases as a result I tend to appreciate it more.
Take the example of a nice plasma TV. If I were to go out and buy it on credit then I would not really appreciate it. However if I were to give up coffees for six monthsjust to buy it then you can be sure that I would appreciate it a whole lot more.
You can take this logic and apply to your long term life goals - things such as travel, home ownership and retirement. The more you spend now the less you will have to do these things.
That said I don't believe in dying rich so I think there is a balance needed between your long term goals and your short term desires.
Hey no one said it would be easy :-)
Over at the Digerati Life there is a post today on 10 steps to being more frugal during the Economic Downturn. It definately reflects many of the ideas expressed by everyone in this post.
http://www.thedigeratilife.com/blog/index.php/2008/10/02/frugal-steps-to-survive-economic-crisis/
This was a good post.
I try to just live as frugal as possible and opt for the basics and no bells and whistles. For example, I got the cheapest cable/phone/internet plan they offered. I probably could afford the $20 extra but decided against it. For my cell phone plan, I did not get any bells and whistles, so data plan, no text messaging, nothing but the cheapest basic plan. Could I afford to add in an extra service-sure. But I'm not in a position right now to do so. I told all my friends, if you don't have ATT M2M, do not call my cell phone. Living this way, allows me to take the extra money I could have used for cell phone services, etc... and pay off debt as well as try and save some money per month.
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