Living Below Your Means
How many people do or even know people that live below their means? If you are one of the few. Tell us all your success story.. How many people live paycheck to paycheck? I have never seen any kind of advise on this matter.
I deal with people's bad judgement and financial problems all day long. That is my motivation for not getting caught up with living like the Jones.
Lori
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I think if you load up Quicken and set automatic depreciation for things you own and automatic appreciation for other things you own, and also track what you spend, you will quickly start living below your means.
I know it's been helpful to me.
I like to jokingly quote this one...
"Never live beyond your means -- no matter how much you have to borrow to do it."
I'll give a few ideas. I always buy my cloths 1 year ahead of time at Dillard’s in the months of late july-aug and late feb-mar for 70-80% off. I have furnished my home with antique Mahogany furniture which I have bought at estate auctions, and the newspaper for about 20% of their worth. I drive a 95-model car that has been paid off for 5 years. I eat out 1-2 times a week. I try to limit the purchase of all liabilities. I live in a house that costs half of what I qualify for. The home you live in is not an asset.
Oh alright, I will share my secrets. I have a home filled with antiques and collectibles that I buy at flea mkts, garage sales and estate sales. I drive a 93 Stealth which is a head turner and PAID for. I buy clothes at the end of the season and save them for next yr. Sometimes they are 75% off! I trade for services when I can. I have a limit as to how much I spend for gifts, but always get great gifts at places like Tuesday Morning and Gordmans. I bought a beautiful armoire for $95.00 at an auction. If you need great area rugs, shop at QVC and Home Shopping Channel. I have an Aubuson rug from QVC that I bought 10yrs ago for $300. It is wool and still looks like new. If you know who Clark Howard is, he learned his lessons from people like me. I was a single mom for awhile and from that experience, I learned never to waste my money or my time.
If you want more tips, send me a note and I will tell you more. Maybe I should write a how to book! Good luck!
I think this is a valid, and important topic to be discussed here. I noticed when you mentioned it in another post a while back.
When I was in the Military I played mommy and daddy to 65 young adults, I was constantly shocked at how many of them had no clue as to budgeting and planning for thier future. The varied levels of financial success was amazing considering everyone made the same amount of money, most were constantly broke, some did very well, one young man was investing $1000 a month, others spent every dime on a car and at the strip clubs, and one particular young man had a fondness for porno movies and chinese food. I constantly tried to educate them, now and then with some success.
Whenever I read a post here where someone says, "I have no money and bad credit, how do I get started in REI?" My reaction is to think, if you can't handle your personal finances, you sure don't belong in REI. But I guess that would be rude, so I keep it to myself.
Quote:Tell us all your success story.. How many people live paycheck to paycheck? I have never seen any kind of advise on this matter.What is a paycheck?? I have been self-unemployed for almost six years now.
If you are looking for a how-to book on the topic, check out "The Millionaire Next Door". Not really a "how to" book but lots of useful suggestions and tips that the millionaires amonst us have employed to amass their wealth.
I put this post, not for myself. I have been reading this website for the last couple months and I'm still surprisedmat most things I read.
This FORUM has "Living Below Your Means" as a sub title.
I always read about people complaining about THEIR collections, and why they are not removed or that they are sold. I never see any posts that say "PAY THEM OFF" How could someone actually tell someone to write a "NOT MINE LETTER" Guess what it is yours. By telling people these stupid ideas, we would in turn be setting them up for disaster. Think about it, we are not parents, you are investors. I have been for the last 15+ years. I had to sit on the couch for 8 months to save money to buy the rest of the set.
I know this is a website, I see people being put in jail for all sorts of reasons. What about for telling people to commit fraud. A "NOT ME" letter is fraud. My advise would be to to save the money and pay it off.
My advise to people that don't qualify for the best rate: I tell them how to be able to get to that status. i help them set up a plan and follow it. I have people who will want to refi because a home improvement man knocked. I would love to get the commission, but it is my duty as a licensed broker and as a respected business woman to get them sound advise. This person qualified for Home Improvement Grants through her city. She called and thanked me for saving her the money.
I have to look at what is right and what is wrong. I won't buy a car unless I can pay cash. I put money away every month for a new car. I drive an Acura 3.2 TL, I traded my Acura Legend in for that car.
Most people need to look at how they are living now, becoming a REI won't change them. There are so many posts on who to get rid of "BAD CREDIT" I think people need to ask how to maintain good credit.
We may not be responcible for other people, but we are responcible for the advise we give.
Lori
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Quote:
On 2004-05-08 17:13, quickspic wrote:
I'll give a few ideas. I always buy my cloths 1 year ahead of time at Dillard’s in the months of late july-aug and late feb-mar for 70-80% off. I have furnished my home with antique Mahogany furniture which I have bought at estate auctions, and the newspaper for about 20% of their worth. I drive a 95-model car that has been paid off for 5 years. I eat out 1-2 times a week. I try to limit the purchase of all liabilities. I live in a house that costs half of what I qualify for. The home you live in is not an asset.
I like your style
Lori
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Quote:
On 2004-05-08 18:21, SKHunter wrote:
Oh alright, I will share my secrets. I have a home filled with antiques and collectibles that I buy at flea mkts, garage sales and estate sales. I drive a 93 Stealth which is a head turner and PAID for. I buy clothes at the end of the season and save them for next yr. Sometimes they are 75% off! I trade for services when I can. I have a limit as to how much I spend for gifts, but always get great gifts at places like Tuesday Morning and Gordmans. I bought a beautiful armoire for $95.00 at an auction. If you need great area rugs, shop at QVC and Home Shopping Channel. I have an Aubuson rug from QVC that I bought 10yrs ago for $300. It is wool and still looks like new. If you know who Clark Howard is, he learned his lessons from people like me. I was a single mom for awhile and from that experience, I learned never to waste my money or my time.
If you want more tips, send me a note and I will tell you more. Maybe I should write a how to book! Good luck!
I think people need more than a book, but it would be a start
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Quote:
On 2004-05-08 20:59, DaveT wrote:
Quote:Tell us all your success story.. How many people live paycheck to paycheck? I have never seen any kind of advise on this matter.What is a paycheck?? I have been self-unemployed for almost six years now.
If you are looking for a how-to book on the topic, check out "The Millionaire Next Door". Not really a "how to" book but lots of useful suggestions and tips that the millionaires amonst us have employed to amass their wealth.
I should have said JOB to Job. I think that is how most people get messed up. They don't know how to pay themselve.
Lori
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Lori,
First I have to say nice choice on your 3.2 TL. I've got a 97 3.0 CL but they have since discontinued the car!
Anyway, I started out writing a decently long story here but I can really sum it up in a few short words: delayed gratification.
If you can live by those words then you have the opportunity for much more.
Pay yourself first and buy assets not liabilities. Don't buy anything that you cannot pay cash for (except real-estate)even a car. If you use credit cards, pay them in full every month. Don't be too materialistic, things are not as satisfying as financial freedom. When you get into consumer debt you are selling your future. More often than not people who have lots of expensive things are "big hat no cattle" types (from the millionaire next door). So don't be impressed by them. Don't confuse high income with wealth they are not the same thing. Ok one more platitude. " It is not what you make it is what you keep." Read "Rich Dad Poor Dad"
No offense, but ya'll must live lame lives. I like my porsche. I like my expensive house. I like eating out every day. I like taking trips to Europe. I even like dating expensive women from time to time, knowing that it is a very bad investment
Face it, you only live once so there is no reason not to enjoy the finer things in life. That being said, I still put 10% of anything I make away for retirement and another 10% is invested in the stock market. Living below your means doesn't mean paying cash for your car, it means being able to afford the monthly payments, planning for the future, and still have some $$ left over.
-Chris
_________________
Live long and be profitable!
[ Edited by c-brainard on Date 05/10/2004 ]
Thanks very much tinman. You're a class lady.
Well, I retired from the military, sat on my Bachelor's Degree despite married with 3 kids 10, 12, and 16 yrs old, and delivered pizzas. Very close to zero female spouse opportunities in farm town. My wife stayed unemployed. Military and townsfolk buy pizzas. About 8 nice neighborhoods out of 20. 22K population. I learned how to live in a two-room apartment with nearly all our stuff in storage. Family teamwork. Great location with huge playground/football/baseball field grassy area (used for those sports) inside eight circled apartment buildings.
Through 70% cut in pay I learned much more about people, about earning my job and reputation in a place where people quit without notice, but also are young and need good living quarters, and are trying to climb out of poverty. I joined and now run our first softball team (coach quit store and therefore the team). I received striking motivation to always save tips and every nickle, but I could have easily gone soft and used credit cards, since I'm very employable elsewhere--I could make up the spending binge in a few months.
Best 8 months of my life. Nice, safe neighborhood helps significantly. There's no denying that. Otherwise it's about growing to be happy, not acquiring and accumulating stuff (even if it's on sale!). There's no room for extra on-sale junk in the apartment. Best assets: Health, family, and mental state. Additionally, a 1990 Honda Civic hatchback with 88K miles. It's a big, paid-off assett. Low mileage! It's not even middle-age yet. 1997 paid-off Honda CRV. I purchased it by stating firmly, "Please cut the 'Options' package in half [the sticker on the side window of all new cars that adds $3K], give me front mud flaps and a red dashboard cover with me and my wife's name in cursive, and I'll buy today." There was no haggling, $1,800 saved, 1 hour and 30 minutes until finished. I bought before the CRV was selling like pancakes inside IHOP. I had the second one in Biloxi, MS. It's black. One skinny, glitter pinstrip. Lots of looks and visitors to see inside. Price jumped $2K 7 days later and remained thereafter. Even a waiting list was started I was told.
I got the hardshell, spare tire cover and luggage runners on top, making car look a little taller, ~better, quickly identifiable when I see my wife and kids going to and from free martial arts (that's where my wife works-she's the instructor). She teaches at the base gym free of charge, 2 hours a day. It's a somewhat poor town, too many MA schools, so my wife's class stands out for the last few years, keeping military families together and in shape, which includes ours. More wealth again, sharing.
Alan[ Edited by fearnsa on Date 05/10/2004 ]
Interesting Post. It's an opportunity to understand how many of us think.
A few thoughts....
Living below your means is not living an impoverished life....it's simply spending less than you make. There are millionaires who do live within their means, and millionaires who do not. Our wants are insatiable; always hungry and craving more.
A few little things that I do:
Buy cars at auctions
Wait a few months and Go to dollar movies...new movies $6, dollar theatre $1.50. That's a 75% discount for the exact same thing!
Short of a college education, home, and leveraged investments buy (almost) EVERYTHING when you have cash to pay for it.
use credit cards...don't let them use you. Take advantage of rewards programs, but adhere to the rule above.
Realize that EVERYTHING has an opportunity cost. Paying interest is my least favorite thing to pay for. Don't pay interest in your personal life.
pay yourself first (Read the book "The Richest Man in Babylon). Before you pay taxes, insurance, bills, mortgage, etc., put (at least) 10% of your gross income away. Use that money to invest. Never spend it. That's the money that you're going to use to retire 10 years from now (...even if you're only 20).
Have the self control to buy things when you NEED them (not want them). Buy your "liabilities" after you've reached set goals.
Ask yourself "how can I increase my earning to buy this" rather than "how can I decrease my spending to buy this".
Don't be vain....it's an expensive habit.
Don't Smoke....also very expensive
Plan for a rainy day....not a sunny one!
I could go on. More than anything, it's a mindset and a way of life rather than incorporating a few tacticts.
Compounding interest is an amazing thing. If you manage to invest $100 per week at 10% interest, starting when you're 20, by the time you're 60 you'll have $2,740,400. Many people spend that in a few extra clothes, fast food, a gym membership that is never used, cigarettes, alcohol, and other frivolous items. Most 60 year olds do NOT have that much of a nest egg. It's a very simple formula....just tough for most to do.
[ Edited by hibby76 on Date 05/10/2004 ]
Actually, it does mean living a frugal lifestyle to be able to afford lots of stuff at the end.
Quote:
On 2004-05-10 02:41, c-brainard wrote:
Living below your means doesn't mean paying cash for your car, it means being able to afford the monthly payments, planning for the future, and still have some $$ left over.
<font size=-1>[ Edited by c-brainard on Date 05/10/2004 ]</font>
Learn to distinguish between your wants and your needs. Your basic needs (food, water, clothing, shelter and transportation) are few and relatively cheap. Everything else is a want. BTW an H2 is not a transportation need but a want.
To live below your means do not satisfy a want unless you can afford it. Personally I never finance toys (wants). And yes I live the good life. You will be suprised at how much stuff you really don't want when you have to save the money before you make a purchase.
A key component of any successful business is cost control. REI is a business. You should view your personal finances as a business. Learn to discipine your spending (satisfying your wants) and you will be successful. Don't and you will always be looking in.
We live very comfortably below our means, and do most of the things already mentioned (drive older, paid-for cars, buy clothes off-season at a huge discount, pay ourselves first, pay cash for most everything, etc.). One thing that was not mentioned but has a huge payoff in the end – anticipating future purchases/needs. Example, if you know your car is going to need tires in a few months, get on the ball now and start shopping, compare prices, etc. I replaced the tires on my van last year. Prices for a set of 4 at many places were in the $400-500 range. We belong to a wholesale club, who regularly publishes coupons and they had one $7.50 off per tire, up to 4. They ordered the tires I needed, I used the coupon, and the price included lifetime balancing. Total price – just under $300. Had I waited until the last minute, or heaven forbid, got a flat on the side of the road, I would have had no choice but to get them at the first place I found them, no matter the cost. We do this on just about every purchase we make. I also regularly use coupons, shop grocery store sales, stock up on loss leader products, make good use of my freezer, and spend less than half the amount on groceries than most people I know. And this is for our own family of 4 plus 8 other children I have here 5 days a week. Prepackaged foods are way expensive vs. cooking yourself. I know the majority of men on this board could probably care less about this, but I handle the finances in our house. I don’t mind cooking, it’s not hard (even for a man, LOL!) It seems most times people opt for the more expensive route of convenience rather than working just a little harder but saving a ton.
Hey,
What a great thread!!
I believe the start of any financial control, begins with a BUDGET. You have to account for every penny you spend for two or three months. Then you list all of your fixed expenses (house, insurance, car, etc.), your required variable expenses (gas, food, car repairs, etc), your variable but not required (movies, eating out, vacations, etc.) debt coverage (VISA, lines of credit etc.) and savings. You will be shocked to see where you are spending money. Allocate your money to pay off debt by lowering your variables.
No matter what your income, you must have a budget.
I have a story, sorry but it's kinda long.
Interesting tale of 2 families:
Family #1, husband and wife, 2 kids. Husband makes a good living doing mechanical work, wife is a hairdresser and makes good money as well. They like the finer things. Nice cars, gold jewelry, eating out all the time. 12 years ago buy they biggest house they can afford. Kids get everything under the sun they ask for, clothes are always name-brand and new. Wife wants a new (expensive) car, they take out a home equity loan. They buy it, here comes baby #3. Buy more stuff, no way the baby gets hand-me downs. Couple years later, refinance their house, pay off equity loan, get money to build a garage. Then comes baby #4. More new stuff. They have the maximum withheld from the paycheck every week, so of course they can get that huge refund at tax time and buy new furniture or go on vacation. Not a dime in savings. Ooops, credit card bills are getting scary, let’s refinance again, for the last time, pay off all the bills, start clean. Oh my, husband wants a new truck, home equity loan time again. Ok, here it is Christmas time again, we spent $2k last year on stuff for the kids, we cant possibly spend less than that, but we just got the truck, have to charge again. Couple years later, husband’s income goes down, a few times. Work is tight. They cant change their standard of living, they have credit cards. There go the bills. Last year, guess what, rates are down they can refinance and pay off all these bills! Wait, they need some more new furniture, ok charge it but pay it off in 6 months. Help! They are outgrowing the house, hey property values have skyrocketed, lets refinance, pay off these bills AGAIN, get out some money, build an addition and get a pool! Now that’s living! They have lots of "stuff", no savings, and a house mortaged almost to FMV. They are going to be working to pay off their “lifestyle” until they drop dead in their grave.
Family #2, couple purchased a rental property at the tender age of 21, while living with roommates paying a mere $200 a month. Made no money, but hey, they have real estate. 6 months later, they buy a duplex of their own. Live there 5 years, have a baby. Husband finishes paying for a building lot he bought when married to his previous wife. Only the husband works, supports family on $30k a year. Eventually build a house on the lot, using the equity as a down payment. Moves there, rents out duplex. Still only one income. Credit card bills sneak up. Wife starts daycare business to earn money while being able to stay home with own child. Then baby #2 comes along a year later. Bills pile up more, despite being careful with money. Husband’s income moves up only slightly, wife takes on more kids. They sit down, devise a long-term plan, and in 1 year pay off $10k in credit card bills. They make the decision to take that extra money then and start investing in the stock market. They continue to live meagerly but comfortably, to get some money saved up. Market goes up, couple years later they find the townhouse next to one of their current rentals is up for sale by HUD, they take all the money out of their mutual funds and buy the place and fix it, rent it out. Real estate market has been flat for many years. 6 months later, a nicer townhouse goes up for HUD foreclosure, they are able to squeak by and get a loan, buy that one and rent out as well. A little cushion is building now, things aren’t so tight, but they continue to live the same, being careful with every purchase. The real estate market goes crazy, suddenly they have tons of equity. They take a home equity loan, buy another foreclosure, rent it out and have another $600 a month positive cash flow. House next door, they find, has been empty 2 years. The owner is the widow of a wealthy businessman, basically doesn’t want anything to do with the place. Get a loan on the place we bought a couple years ago and paid cash for, which is now worth over $100k. Fix the place up, rent out, and make another $500 a month positive cash flow. Now where do we stand? We had (and have) very modest salaries, compared to many other people we know. I don’t think our taxable income on our 1040’s has ever exceeded $55k. We own $1.2 million in real estate, with about $600k equity. All on a modest income.
Moral of the story, it all comes down to the choices you make in life. We chose to sacrifice in the beginning, for several years, while young, so that we could relax later. We’ll be 40 this year. We could both quit our jobs right now and be fine. If you saw us on the street, you’d never guess in a million years we have what we do. We are everyday people who work hard but are very careful. My husband quit his job of 20 years last fall because the company was falling apart. He was out of work almost 3 months, and found a much better one. We were fine. And will be fine. Because we know that it’s not how much you make, but what you do with it that counts.
[ Edited by pinkflamingo on Date 05/10/2004 ]
My frogger,
They cancelled the Legend too.
But the point is what I did when I was 23, 24, and 25, has made it possible for me to do today what I love doing. When I was young I thought having everything NOW was important. I try to teach my youngest (13) and Andy's son (16) to depend more on themselves. They started a little "landscraping business" (lawnmower and an extra gas).
I go to many REI Meetings and people just surround me with questions. How?,What?, Where? and Why?
I believe it is my responcibility to give people with No money, No job, just a dream of becoming financially secure the correct advise.
I would think that you must start by living 20% below your means, just to get reserves in check, in case a pipe in your rental breaks. This process has always reminded me of Mickey and Goofy's race, Mickey went fast and sloppy and lost. Goofy went slow and steady and won. That is what I had to do in order to become successful. Slow and steady.
I think we need more posts about how be accountable, productive, mangeable in our goals.
Thanks to everyone that replied
Lori
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I like my Porsche also. It is a childhood dream that came true. The difference is that even with new paint job, interior, rims, and engine work it was still cheaper than a Honda. 1983 944 at a sixth the cost of a Boxster and turns more heads. All paid with cash.
I live paycheck to paycheck. But I do it by maxing out equity accounts instead of credit accounts; 401K, IRA, Stock Purchase Plans, and Real Estate Mortgages.
It also helps that I (and thankfully my wife) HATE shopping and acquiring stuff.[ Edited by dstudeba on Date 05/10/2004 ]
Most of us learn our saving habits from our parents. The ability to delay gratification, live within our means, save for a rainy day, or whatever you want to call it - is usually taught to us by our parents.
Quote: On 2004-05-10 14:18, dstudeba wrote: I like my Porsche also.
Well, at least one person sorta agrees with me :(
-Chris
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Wel, I guess I am different from most of you... I am a democrat! lol! Actually, on of the biggest reasons I got into real estate, is that I am a terrible saver. Gosh, what i do, is when I want to buy something, I buy more cashflow. And... In 15 years, I won't have to work. i will work, but I'll have the luxury not to have to. So go ahead and scrimp and save you conservative tightwads (easy just kidding you) If you happen to die while eating dinner one night, all the 401k's, savings accounts, etc... won't save you. When it happens to me I'll have enjoyed my new cobra golf clubs, my Harley, my Gulfstream, my big house, my Meucci cue stick, my CC membership, etc... Plus, my wife and children will be set up with income that properly managed will last many generations. However you do it, this is the land of opportunity, and life can be really good. I remember a time 12 short years ago when I wondered where I was going to find $175.00 to pay the rent. Yes, life is good.
Good Luck,
Shawn(OH)
c-brainard, considering you are putting away 20% of your income, I don't think anyone weighing in on this thread would really disagree with you, it's about living within your means, it would appear that you do that. What nice stuff someone may or may not have doesn't have anything to do with if they are living within their means or not.
Living below your means should not mean that one should not enjoy a good life or have some fun. I also believe that a plan for living below your means should include trying to increase those means to afford more of your wants.
Wants are not necessarily a bad thing. I have wanted a BMW for a long time and one day I intend to buy myself a brand new one, but only when I can actually afford one.
A lot of the responses focus on denying your wants. I believe there is a balance between wants and needs. Wants make life mor e interesting and should not be so easily dismissed. However, the pursuit of wants should not become so all-encompassing that we end up unreal amounts of debt.
I think this is a wonderful thread and I have enjoyed reading the different opinions in this thread.
More of this kind please.
Hey,
I like my Porsche also. And for you who know cars it is a 996 Cabriolet, Carrera 4. I paid cash for it.
I also like my BMW 740. Which I paid cash for.
I also like my Ford F-150, which I paid cash for.
I also like my wife's Volvo V70R (you really have to know about cars to know this one), which she paid cash for (okay, I really don't like or dislike her car, but it flows better this way.)
I also like Plasma TVs, Vacation homes in Aspen, five carat diamond rings, jet skis, powerboats, lawncare service and business class tickets to Europe. But I don't own any of these.
We all make choices in life.
My first job out of college paid 26k. A year and a half later I was making 56k at a new job. And because I was overseas, I was paying 0 income tax. This was great. I could afford pretty much whatever I wanted. And I never saved anything. What a great life, until I woke up and realized the wasted opportunities.
Anyway, it's now ten years later and I've more than doubled my salary. But I live paycheck to paycheck because I can't wait for that next salary payment to come in so that I can invest it further or put it towards another RE purchase. When I got married I realized that I was no longer responsible for just myself. I was now responsible for my wife and the children we plan to have. My wife works. She's a Sr. Accountant at a leading oil company. But I want her to work because she loves her job, not because I can't provide for her. So I live paycheck to paycheck.
Now I need to teach my wife about living frugally. She's from a country and culture where people just don't save. They’ve seen two currency devaluations and a major financial crisis all just in the last 10 years. So people there buy new cars all the time, and go on at least two international vacations per year. They're hugely brand conscious. They live just for today, and have no confidence in the future. What an uphill battle. Me a reformed spendthrift trying to instill the wisdom of saving and planning.
Every single one of us is blessed to have as many opportunities as we do. But there’s no guarantee that these opportunities will always be there. So don’t waste them by living just for today.
I like Bruce's Porsche too. :-D
And I do spend quite a bit on one want....I want to live closer to the beach and that is what drives everything.
Hey,
Just a quick update...
I found another person who liked my Porsche today...the cop who pulled me over for speeding!
Like many entrepreneurs, I have a healty sense of independence and for not wanting to be under any employer's 'thumb.' I only worked for a for-profit corporation once, for a summer twenty years ago. All jobs I've had since have been in teaching, or for non-profits. I haven't had a formal "job" for 3 years, when my last teaching job ended. The only long-term debt I've ever had was some student loans, which I figure was a good investment. It seems very basic to me to only spend what you have and avoid debt (except, of course, in real estate, but that debt is designed to be manageable and it serves me, not vice versa)
Thrift can be learned, and should, by all means, be taught to your kids. My thrifty, resourceful Mother (single Mom) never had a credit card, but I have a few, and have never carried a balance. I get some of my food from grocery store Dumpsters (did you know this is a trademarked word? Use it with respect!). Sadly, most groceries have moved to sealed system trash now, no way to get in, all that wasted food, sigh. I also scavenge goodies for personal use and to sell on Ebay from alleys, esp. on the first of the month in transient neighborhoods, when people are moving. I've been doing that less lately, too, since I've gotten into real estate more seriously. But so much gets wasted these days. I also have political reasons for my passions, but that's a different chapter in another book.
Many kids these days get litle or no guidance from parents, who I guess think they'll figure it out on their own. Possible, but it's much harder. Luckily, I learned thrift from my Mother. She got me fired up about auctions, yard sales, the dump, anywhere there was good cheap or free stuff, but only stuff we needed, nothing superfluous. She wheeled and dealed with neighbors, something I do now too. I was watching and learning. Don't underestimate your power and influence as a parent. Rich Mom, Poor Mom and all that.
I could tell stories...but my thrift inevitably led me to real estate, where I can apply the basic principles of scavenging and sniffing out deals. It's a little more work than cruising alleys, but just as fun.
The father ot an old girlfriend told me a riddle about his ethnic brethern which I'll always remember.
Question: What's the difference between a rich (person) and a poor (person)?
Answer: A rich (person) washes his own Cadillac.
Chris no offense but I disagree with you. True you do only live once and my point of view is that I would rather live comfortably without the fear that I could lose everything I have because my credit cards are maxed out, my car payment is being missed and that the things I have I don't own, I am basically just renting them. To me credit card debt is the most assinine way of thinking that has ever been adopted. Basically what lenders have talked us into is not only giving them our paycheck now, but also spending our future paychecks AND paying the lenders to do it. My advice to anyone wanting to live below their means, get rid of the credit cards UNLESS you pay them off each month as a way to track what you are spending. If you are carrying a blance each month, then in my opinion you are buying things that you don't need. People live paycheck to paycheck because that is what they were taught and thats what they see other people doing. Right now I have one years expenses put back in reserve and I don't just mean the bare minimums I mean what I really spend in a year. If you are living paycheck to paycheck that would indicate to me that you have nothing set back in savings and to be blunt are really just one paycheck away from the soup kitchen. I don't mean to sound rude at all but I feel passionately about this subject and wish people would stop feeling content with that paycheck to paycheck, I will just put it on my credit card attitude.
Also in response to an earlier post about claiming that collections on your credit report aren't yours, I will admit that I have done that before. Now before I et lambasted for sucking off society and and not paying my bills here is the story. I did have some outstanding collections that needed to be paid. I had three choices. I could dispute them, get them off my credit report and never pay them, I could dispute them get them off and then pay the creditordirectly or I could pay the collectinoagency and then dispute it with the credit bureau. I chose the last route. My advice would never be to not pay your debts, but I don't see any problem with disputing information on your report on the chance that it would get removed and help your score. The creditor got paid, you fulfilled your debt and you got it off your credit score. So just an addendum to past advice
Thanks for readign my rant
Joe
[addsig]
Guys,
After reading everybody’s response perhaps there is a medium. REI should be about achieving your goals and getting the things you want . But on the other hand you come to realize what you want should be important things if a nice house is important so that you can live comfortably and enjoy your family then to me that is ok , but to be a high flyer well at some point I guess one comes to realize that might not be the way to go. That's my take on things . :-D
Quote:
On 2004-05-10 15:04, bgrossnickle wrote:
Most of us learn our saving habits from our parents. The ability to delay gratification, live within our means, save for a rainy day, or whatever you want to call it - is usually taught to us by our parents.
One can certainly do things in reaction against one's parents as well. Especially if their financil lives didn't work out so well.
This may be a little off the thread but this comment sparked some interest:
"Question: What's the difference between a rich (person) and a poor (person)?
Answer: A rich (person) washes his own Cadillac. "
I don't fully agree with this. I know what the saying is driving at but there is a caveat. This comes down to value of time. A lawyer making 120/hour is more valuable practicing law than he is washing his car. If he pays $20 for wash that is still worth his time. In the hour and a half it takes him to wash his car he could have billed $180. Yes if he washes on off time then he has saved twenty bucks but then he is working for less than twenty and hour.
I actually enjoy things too. I want to clarify that we do not live badly. I own 2 rentals, a vacation home in Lake Tahoe and my personal house. And I do not have to work full time, nor does my husband. Since we have no consumer debt. We bought the property (which appreciates) before any depreciable "luxuries"
I bought my BMW 2 years ago when it was 3 years old. I love it and it was worth every penny, although since I bought it privately and paid cash I paid less for it than the middle class people pay for their new Toyotas. I bought it from a girl in marin who had more $$ than brains. She was 26 still living with her parents because she could not afford a place of her own. She bought my BMW new for almost $40k then decided she needed an SUV. Since she still owed on the BMW and her new SUV she sold the car to me for $19,500. It was practicly new. 20K miles and perfect. It was even still under warrenty. I am not "cheap" I like to call it "value oriented". I would never have bought it if I needed the $$ for something else or if I had to get a loan. There are plenty of other cool cars that are cheaper.
I did not post this to tell people they should not enjoy things or have things. You can be "penney wise and dollar short"
Assets don't equal income
Lori
[addsig]
I agree with you tinman, I was responding to the guy who said he liked his Porsche.
Hi!
I like Bruce's Porsche, too!!!
My way of looking at things is this:
Why pay top $$$ big money for an asset that will be worth LESS 20 minutes after you drive it off the lot when you buy it new? I ended up buying my dream car by finding someone who had to sell it quickly in order to take a job promotion sending him to another country. I didn't buy it new, but I was more satisfied with it than if I had. (It was an Acura Legend, and they don't make those thingies anymore!) And because I bought it from a diplomat who wasn't required to pay taxes, I was able to get it way under wholesale book to boot!
I am eternally a bargain hunter. A shopaholic, if you will. But I can't STAND to pay department store prices on everything. So I hunt through storage shed auctions and car auctions and garage sales and generally have a blast doing so.
They say that the two biggest expenses in most people's lives are their car and their house. So my focus and my goal has always been, how can I get those two items at a discount? I don't mean 5-10% off, either. That's what has led me toward real estate investing, the eternal bargain hunt. I figure if I can get the big dollar items for 30, 40, 50 percent off, then the money I spend day to day will take care of itself.
I've seen people go to an auction and pay top dollar ABOVE dealership lot prices for a 3 year old Honda with 125,000 miles on it, and turn their nose up and let someone have a 1 year old Lincoln Town Car for $3,000 because it had a few parts missing (the front bumper, it was a theft recovery vehicle that was seized by the cops while the bad guys were still stripping it - but the Honda was stolen recovery vehicle, too). That Town Car could have easily been brought back to new condition for under $7,000, meaning that you would have a $35,000 - $45,000 car for right around $10K or so plus towing.
The reason everyone was into the Honda and not the Lincoln? They were all thinking like CONSUMERS all the time. They wanted it NOW, they wanted it perfect. 125K miles is not perfect, but hey - there's no work involved. At the time I was researching that particular auction for the first time, so I didn't come prepared to bid for that Town Car. But I've had the fortune of paying $100 for a mechanically sound car and being able to start it and drive away.
I found a car when I was in the military that I paid $40 for. Yes, forty dollars. No, it wasn't top of the line or even close. But the funny thing about it was, the owner was a SERIOUS don't wanter. He was actually willing to pay ME to take the car, things were so bad. Because I worked with the guy I offered to buy him a case of beer. I didn't drink, so I offered to pay him enough cash to make sure he could buy whatever kind of beer he liked and have change left over. He was happy with my $40 offer because the car didn't run and he didn't know how to fix it and the military base where he lived had just given him notice he had to move it or they would tow it and send him a bill.
What am I trying to say here? I guess it's all about your perspective. I don't think that you need to have perfect credit and loads of cash as much as most people think. (Hey, it does help, but it's not a requirement.)
When I was growing up my parents always tried to teach me to be frugal. But both my parents were dreaming of doing things that they thought there was no way on this earth they could afford. So they didn't even pursue them. Yet when my dad died we discovered there was enough money stashed around in many different places that he could have paid for his dream vacation 3 times and still had money left over. Why didn't he spend the money and enjoy his last days? Fear of not having money, of spending it and then something going wrong and needing the very money he had just spent. FEAR!!!
He did like a lot of people do. That is, they go out and figure out how much they can afford and then go and find something to fit what they can afford, putting blinders on and saying anything they see outside their unique parameters is something they "can't afford." Oftentimes people will not even consider any other possibilities once they have it set in their mind that they cannot do it any other way. Being the rebel kid that I was, I always was asking, "Why not?" People older than me always stared at me with this funny look. But my thing was, I was always asking myself what I had to do in order to truly afford what it was I wanted in life, and then start down the path to go do or get what it took to be able to afford those things. Shortly before I graduated from high school I sat down and described the house and car I wanted, figured out the monthly payment on each, and then tried to find a line of work that would provide me with enough money to get those things. The figure I came up with was staggering in relation to my parents' income, but this was my future and my goals, so I figured shoot for the stars.
Then I set about on a course that turned out to be a very scenic route! (another story altogether!) But I have always known exactly just how much it would cost to obtain the things I consider to be my dream-things, like dream car and dream house. And I don't rule out the possibility of me obtaining them. So many people do rule out the possibility. I take action towards my goals every day, even if the steps I take are only baby steps.
So many people focus on cutting the expenses, cut the expenses, cut the expenses. I say that's great. But I say it's not the only way. It's sometimes a lot easier to increase the income if only you open your eyes and be more alert to the deals around you.
By the way, when it comes to movies, sometimes you can buy a movie when it first comes out on DVD, watch it at home during the first week or so of release, then sell it on eBay for what you paid for it. This way you're getting your movie for free! I've also done a car the same way. That is, I've bought it, driven it for over a year, and then sold it for what I paid for it (not counting auto insurance and gas, of course).[ Edited by getmikey on Date 05/13/2004 ]
I would side with Hibby, being frugal isn't living a monklike lifestyle. I never buy new cars (not since 15 years ago
I pay cash for everything and I get a discount. I go to the "dollar" theater, use a library when I can and spend less than I make.
I have raised my children that there are only three things that qualify for borrowed money.
1. An education (this to sh ould be treated like an investment what is the reward vs the cost in time and money).
2. A house or primary residence.
3. Well secured business debt.
This allows me to travel to europe every year or two, invest in a wide variety of things, and sleep well knowing that if I have to I can live on 20% of what I make.
[addsig]
Well, where do I start? Here goes a really disorganized ramble....
I used to make about $25,000 per month. I blew it all. I used to say, "I never want to be making just $120,000 again" and those days are gone. I am looking at REI as an option for a better future, but I had to learn some hard lessons about $ first. I still owe Uncle Sam a little bit of money, but I am living a decent life in spite of the $850 each month I send (on top of my currently withholding). I've had to learn the hard way that delayed gratification really is a better way to go.
I've also learned that planning helps tremendously. I've started teaching other people about managing money based on my experience of the past and the changes I've made. The first thing I say to do is find out where your money is going now. I started tracking every expense and categorizing it. I've done that for over three years now. I can tell you how much I spent on auto maintenance in 2002 or how much my wife spent on clothes last month. I have a budget designed by looking at my past and cutting expenses where I thought I could. The bottom line is I've got a handle on my finances. Each month I print a report of last months variance to the budget and the tear to date variance. (MS Money is an awesome tool - I used to do this stuff with Excel). I know right now that in about 5 more months, it is going to be time for my 120,000 mile tune up on my PathFinder (I bought it used for $20K w/ 40K on it). That will cost about $1200 to get everything done that I want done (some maintenance I'll request is optional but not a bad idea to handle at the same time while they've got the engine opened up already). My wife was really upset when she knew she had to get a "new" car. She said, "I know your going to make me buy a used car!" We got her an Acura MDX for about 10K less than if we had bought a new one. (Love those lease trade ins).
I haven't bought any RE yet - I'm still looking and learning (InfoSponging right along). I bought my house several years ago. When we were looking for a house 6 yrs ago, the agent we were working with wanted us to by something 3 times as much just because I qualified for a bigger loan. I can tell you now, I would have taken a significant loss on the house 3 yrs ago when the IT market fell apart. I would have been an awesome candidate for a seller in a sub to arrangement. As it is, I was close to foreclosure, but by the grace of God, I got a job that paid a decent sign on bonus that helped me get current. I am a strong believer in buying less than you can afford! I know I could still spend less than I do now if I wanted to. As it is, my net worth is increasing at about $3,000 each month. My wife wants me to pay off the IRS before getting involved in RE. The biggest fear is being stuck with an additional mortgage payment and losing a lot of money on any deal I get into.
As I learn more and more about REI, ride my bike through the neighborhoods near home, and run my MLS crawler looking for deals, I am more and more convinced there are awesome opportunities out there waiting to be taken advantage of.
I know my long term goal is buy and hold but I'll settle for some quick cash on a flip if I could guarantee it was a sure thing. One day, I'll be reminiscing on this site or another about the creative opportunities my partners and I came up with to make everyone a winner. In the meantime, I just keep looking, learning, and paying attention to my expenses (and making sure my wife is paying attention as well). =)
A friend of mine has a multimillionaire father with a nice little Cessna Citation X jet I've had the privilege of traveling on. He said, "If people spent as much time figuring out how to make more money as they do figuring out how to save it, they would be much better off." He lives well within his means and it is an incredible life compared to mine. I use his lifestyle to fuel my "dream building" to a certain extent. I know I have to hit certain financial goals before getting my rewards.[ Edited by InfoSponge3000 on Date 05/15/2004 ]
I dont know about going as extreme as buying a car in cash because I wouldnt have anything to drive for a long time if I did that but I think that if you have a brain then you can have the best of both worlds. Splurging once in a while is ok. If you charge something on your credit card make sure you have enough to pay it off when the bill comes in the next month. Car payments are inevitable unless you already make good money and can save 500 a month,but living like a bum and having 20 million at 65 is worthless because you saved your entire life and have nothing to show for it except a 10 year old truck. Im 23 and have excellent credit unlike any of my friends. They spend all day and buy nothing really. I buy assets and they think im rich because I can get approved for houses and cars and they make more money than me, Its crazy how ignorant people are about credit. My friend thinks just because some of the negative things that are on his report are going drop off because its been three years since they happened that his credit score is going to automatically jump from 610 to an 800 like mine over night. He has no credit cards because he cant get approved.
I dont know about going as extreme as buying a car in cash because I wouldnt have anything to drive for a long time if I did that but I think that if you have a brain then you can have the best of both worlds. Splurging once in a while is ok. If you charge something on your credit card make sure you have enough to pay it off when the bill comes in the next month. Car payments are inevitable unless you already make good money and can save 500 a month,but living like a bum and having 20 million at 65 is worthless because you saved your entire life and have nothing to show for it except a 10 year old truck. Im 23 and have excellent credit unlike any of my friends. They spend all day and buy nothing really. I buy assets and they think im rich because I can get approved for houses and cars and they make more money than me, Its crazy how ignorant people are about credit. My friend thinks just because some of the negative things that are on his report are going drop off because its been three years since they happened that his credit score is going to automatically jump from 610 to an 800 like mine over night. He has no credit cards because he cant get approved.
senatorcbp2, do you know that you can buy cars that run for $2500??? My first vehicle was a $400 motorcycle that I paid cash for when I was 18 and going to college in a place much cooler than Texas.
Sure it may not be the prettiest thing on the road, but in the mean time you can make your "monthly payments" to yourself and save up for a vehicle that you can both afford and want to drive.
It is indeed a mindset. I've never financed a car and I've purchased 4. That was even when I was a poor college student working part time and paying my own way through school (no loans).
I have a little sign over my desk that reads like this:
Rules for financial success:
1) make all the money you can.
2) spend less than that.
The point is that its not how much you make or how much you spend-- its how much you keep. One of the joys and frustrations of capitalism is that you have to have capital to participate. One can accumulate capital in many ways-- frugality is only one of them.
I'm currently living below my means because I'm trying to get out of some ludicrous debt. Some of the things I've changed:
1) Some thrift stores will surprise you when it comes to clothes. The problem is finding the good ones. Despite what the employees have told me, the thrift stores in the upper class neighborhoods have better clothes. Of course, it's possibly because less people shop at them.
2) I drink. A lot. (but not an alcoholic). However, if you're within walking distance (which I am) of your usual bar or if you have a designated driver, having pre-drinks at home or a friend's house is a huge help. By the time I make it to the bar, I'll have enough buzz and maybe only buy 1 or 2 there. Bar = $4 beer. Home = $7 six pack.
3) I've started reading instead of going to the movies. Strange thing is, when I remember what I've read, it's like I remember it visually, as if I'd seen it. (No, I'm not drunk).
4) EAT AT HOME - Easily the biggest money saver for me.
Hope this helps someone...
-M
I too drink a lot. Nothing to due w/ this article, just thought I'd share...
Quote:
On 2004-05-10 09:13, pinkflamingo wrote:
We live very comfortably below our means, and do most of the things already mentioned (drive older, paid-for cars, buy clothes off-season at a huge discount, pay ourselves first, pay cash for most everything, etc.). One thing that was not mentioned but has a huge payoff in the end – anticipating future purchases/needs. Example, if you know your car is going to need tires in a few months, get on the ball now and start shopping, compare prices, etc. I replaced the tires on my van last year. Prices for a set of 4 at many places were in the $400-500 range. We belong to a wholesale club, who regularly publishes coupons and they had one $7.50 off per tire, up to 4. They ordered the tires I needed, I used the coupon, and the price included lifetime balancing. Total price – just under $300. Had I waited until the last minute, or heaven forbid, got a flat on the side of the road, I would have had no choice but to get them at the first place I found them, no matter the cost. We do this on just about every purchase we make. I also regularly use coupons, shop grocery store sales, stock up on loss leader products, make good use of my freezer, and spend less than half the amount on groceries than most people I know. And this is for our own family of 4 plus 8 other children I have here 5 days a week. Prepackaged foods are way expensive vs. cooking yourself. I know the majority of men on this board could probably care less about this, but I handle the finances in our house. I don’t mind cooking, it’s not hard (even for a man, LOL!) It seems most times people opt for the more expensive route of convenience rather than working just a little harder but saving a ton.
LOL I used to work there! BJ's Wholesale Club. Another great idea is to buy stuff in bulk, it's simple it's cheaper and your not running to the store 4 times a month for toilet paper.
later,
david
c-brainard,
Great reply! I agree with every word.
Quote:
On 2004-05-10 02:41, c-brainard wrote:
No offense, but ya'll must live lame lives. I like my porsche. I like my expensive house. I like eating out every day. I like taking trips to Europe. I even like dating expensive women from time to time, knowing that it is a very bad investment
Face it, you only live once so there is no reason not to enjoy the finer things in life. That being said, I still put 10% of anything I make away for retirement and another 10% is invested in the stock market. Living below your means doesn't mean paying cash for your car, it means being able to afford the monthly payments, planning for the future, and still have some $$ left over.
-Chris
_________________
Live long and be profitable!
Indeed, maybe I am doomed to fail, but that is my attitute as well. I am 18 and I don't want to buy a three year old car and not take vacations my whole life so that I have a few million in the bank when I'm 60. Doesn't seem to be worth it to me. Besides, this guy puts 20% into his future, which is impressive. Hopefully, I can follow that path.
Kind of unrelated to RE, but since we are talking about personal finances...as i mentioned, I'm a 18 year old college student and am working this summer as an intern in a company. What sort of long term investments should I be looking for now? I don't quite have the resources to jump into RE, but what are some mediums through which I can put a little money every month and it eventually adds up. It is a very basic question, I don't know the terms and am looking for some direction. I also know there are life insurance plans that pay X amount when a time limit expires...unless you die before that, what is that called? I guess I am just looking for some guidance at this point.
Thanks and good luck to all!
Clegg
Determination to live below my means was born in me my first semester of college. My father had seen to it I had enough money for all my needs through my first semester. But alas, this country boy had never had snack machines right outside the bedroom before. RC Colas and peanuts became irresistable.
Reconing day came as I qued up for my grades. Instead, I got a note from the financial office. $64 was due, all because I had drawn on my account to put quarters in the machine. My personal indulgences were jeapardizing my college education! I started work in the kitchen,at $.50 per hour those days . It would take a lot of work to pay for my lack of self control.
The great lesson learned was that of self denial. What I deny myself of is anything that is not essential for my health and well being. I cannot begin to describe the benefits this has had in my physical health, and marriage and family life , where the impact is most profound.
The financial impact is wonderful. By foregoing all personally purchased drinks, candies, substances, foods, etc, and by packing my own lunches, I have saved an estimated $45,000 in the last 35 years. This continual trickle of savings was plowed into things that have enduring value: Homes and investments, and durable items. Things that keep on giving.
Now our family nest is empty, and we can live on a lot less, and we do. Our houses are paying us nicely, and we continue to invest. However, investing is not our goal. This is not why we live below our means.
We live below our means so we can have a lot to give. All our lives we have given nearly 13% of our gross net earnings. That figure is now nearer 25%. In addition to 10% to our church, we support a lady who is in Africa teaching people to read. We met a single mom who could work if she only had a car. So we gave her the use of a car until she could save enough to buy one at auction. We have helped imigrants get settled here, and send money to some struggling to pay for college. We love to give to our grandchildren.
We live below our means so people we care about can live above their means. We volunteer our time for teaching and leading at charitable organizations that specialize in the renovation of people.
Payday for us is not a great deal on a purchase or sale, though we still enjoy deals. Payday is in the smile of a homeless family when we set them up in housing and jobs.
We live below our means, because to live at our means would be incredibly selfish at a time when so many can be hepled to thrive if they just had someone who cared. These people dream of angels helping. I specialize in being an angel for them.
It is a wonderful life! I recommend it to you all! I am learning this life from Jesus.
You can too.
Dan
Dear Dan,
My best to Jesus and of course to Mary Magdeline, they were always my favorite couple.
I was raised by two charming alchoholics who set a great example of what not to do. Of course in their wanderings, they insured that I saw a great deal of the world, learned many languages and had a good hard look at poverty. I learned to live a good and interesting life no matter if I was rich or poor.
I have a system I use, its old and Chinese but damn does it work.
All income that comes in, each month. I take 10% and put that into my capital account. Buy real estate, make loans play profit games. I also take 10% and I indulge myself in speculative ventures. Like buying lots or long term leasing lots.
The rest I use as the occasion requires.All my cars are paid for in cash.
All my real estate has been given away to my loving, respectful,well mannerd children. You believe that? Not really I get no respect, but they took the properties. So I have nothing, other then a few checks that come in every month from various countries, and organizations I worked for flying airplanes and wandering around some very hostile places. All of which I enjoyed. But at the present I have a very restricted income. All my cards stand at zero at the end of each month. I hate paying non productive interest. Makes me cry.
So here I am at age 82 looking back at a lifetime of strange and interesting real estate deals. Some made money and some laid lovely purple eggs.
I am of course very busy playing with little iron containers, turning them into far out houses that all the lower middle class neighbors hate. Too many sharp edges, too much glass and that annoys them as the glass goes opaque whenever we decide the neighbors have seen enough. For some reason they are driven to peer into windows.
The essence of life is having fun, enjoying what you do. I loved my Poarchey 356 and the highly stacked friend that rode with me. I also liked the special RR in which rode the highly non stacked friend with the overbit and the English Boarding School Accent. But most of all I like the 1981 VW diesel pickup truck. I still drive it. My charming wife who has the most profound idiomatic vocabulary of profain Chinese curses, rides with me. We go to very in restaurants and have the valet park the truck right in front with the RR's they get a kick out of it and so do we.
I went soaring the other day in the high desert country and chased little updrafts all afternoon. A time well spent. Probably as close to God as I'll ever get. I've ordered the fire proof suit on lay away.
After 14 years flying combat for various countries who paid very little, I spent the rest of my time in Real Estate Activities. Name it we have done it. Mostly I made money and sometimes I did not. But always I have enjoyed myself. And so should all of you. It has been bags of fun. Actualy it was not the money. I think I enjoyed being my own boss. God knows I worked for enough idiots in the Military and the Government.
Does this convay my feelings? Don't concentrate so much on the money. Some of my best deals came about when I really was not working too hard.
Do the same. Lucius Ein Altakocker.
8-) 8-)
Living below your means always awakens the frugal vs "live for today" comments. ]
Living below your means conjurs different thought for different people. For my family of 5 it means that we maintain a healthy reserve of cash before buying our luxuries. Say 6 months living expenses. For us its more. this doesnt have to be cash, it could be properties.
Should you lose your job or become unable to work for some time you should be able to maintain your lifestyle without losing your house and everything else you own.
The opposite is knowing you can barely afford purchases and you do it anyway. I know young and old so far in bad debt that they will be paying for years and will have nothing to show for it. The problem with that is they have to work. I dont. In fact I often take months off from my career just to be with family and travel.
The trade off is I dont have a porche. but my budget is meager. For those advanced investers they will have the porche and the free time. Its just that you have to do the investments first and buy your luxuries from your profits not on revolving credit.
Instead buy your luxuries using equity or from proceeds from a sale.
Just my opinion.
Hyle[ Edited by hyle on Date 06/22/2004 ]
Im with c-brainard, I say drink up and be merry. Find a medium some where between making a 6 figure income and driving a 91 Civic and making a 4 figure Income and driving a Escalade. Live a little and spend some of your money, because whats the good of money if you aren't gonna spend it?
I dont want to be 65 and be on a cruise to Alaska, I want to be 35 and on a cruise to Mexico. It should be about having fun and living life to the fullest, because you only live once.
On a side note I go to college full time, make very little money and still find the extra cash to put towards investments and have fun.
P.S. - I love Quicken, every one should have it
I believe in a balanced life. I believe in having fun. I believe in being independent.
I know that the only guaranteed way to create wealth is to live below your means. At times you will have to sacrifice, do it. If you consume everything that you earn then you will never be independent.
If you do not save your money, invest your money and plan for the future then you are makeing the biggest mistake of your life.
BTW you can live below your means and still have fun, lots of fun.
I have read many of the replies in this thread and I am truly amazed at how people view "below your means"
My take - bare with me now
1) I am in REI and RE to MAKE MONEY...my time is of value therefore would I waste the 2-3 hours of washing, waxing, vaccuming and detailing my car or pay a proffesional who can do it faster, better and cheaper than I can?
In 3 hours you could find a new deal, find a buyer, network with others in the business vs. saving $50-$150 on a wash and wax?
Time is money - dont waste your time trying to save a few measley dollars when that time could be spent MAKING REAL MONEY
Cheap labor is the essence of efficiency. My time is worth XXXXXXXXXXX dollars per hour vs. Minimum wage per hour
Use your heads folks. Saving 10 bucks on the groceries is great but if you spend and hour or two cliping them you just wasted 2 hours of family time, investing time, working time etc...
I believe a solid 70% should be devoted to living expenses and 30% to investing/saving
Plan for the future but enjoy what you have available to you now in moderation.
Your children are only 2 once in their lives. Dont trvialize their existence by trying to save a few dollars and not throw them a party.
Eventually even 70% of your monthly income should become so much money that you could due with 50% and be just fine. But Enjoy that entire amount with your familes and enjoy the time we have on this earth.
Moderation is the key. Balance.
If your bringing in 10K a month in income do you really thing a $500 car payment is going to put you in the poor house? At that point you could buy the car cash at any point you wanted but with 0-5% car financing why would you want to give up your hard working cash that earns so much more?
CASH is hard to come by. CASH makes you money...let it work for you. Dont tie it up in major purchases like a car, boat, plane, yacht etc...leverage works well if the money is cheap...0% apr ...and your telling me your money earns less than that?
I am a car guy and DRIVING is one of the many daily thrills that I enjoy. Driving a high horsepower sports car isnt to look cool so much as to enjoy it for what it is. But make no mistake I would rather pay a car payment an use my cash for investing than to use my cash and not have any capital to make a deal happen.
We have so little time on this earth that depriving yourself of a new car is downright silly.
15K CASH to save yourself a 300 mo car payment and say 3K in interest.
15K into a 12% mutual fund for 5 years turns into $26,435
By using cash you LOST money. CASH is a precious commodity and has great power. Dont let it sit in an old car thinking "It saved me 3K in interest" when in reality you lost 8K in growth.
Time is money. It pays to be efficient in time management...use your time to MAKE MONEY not save $20 on a car wash.
if you live below your means, you will always have the means to live
