I have never lived beyond my means. I was taught at an early age to make sure I could pay for what I buy. Your house payment or rent should be no more than 1/4 your net income a month. While my parents always paid cash for a car I do get loans but make sure I can sell them for more than I owe and the payments and insurance still allow me to put back a few dollars a month for rainy days.
Does this mean I don't by things that are not needed? NO way, I do on occasion by that extra pair of shoes or something fun because I want to, but when the credit card bill comes at the end of the month I make sure I have the money to cover it.
I will never have a house you’ll see on “Lifestyles of the Rich and Famous” but I sleep well at night.
Thru the years I have picked up little habits that help. I never spend change. If I use my debit card to pay for something, it is rounded to the next dollar and the difference goes into a savings account. When spending cash I do the same thing, I never use my change but instead the coinage I get goes into my change machine and is rolled. I use this money for my once a year vacation.
Another tip I learned is that dollar stores have things for a third of the price that you would get elsewhere. Instead of paying 3.12 for a bottle of Mr. Clean, I spend 89 cents for Ammonia instead.
When buying a big ticket item like a car, I never get the real expensive but look for comfort and gas mileage. Now days they make cars better so they last years longer than they ever did before. I may not have the built in gps but it is paid for and runs great!
I think where many young people fall into the trap is the false thinking that just because you can finance something, doesnt mean you can afford it. Yes you might get it financed but at what cost?
I have also known many many people who do not understand how a credit card works or even how they figure the interest you pay on them. I blame the schools for not teaching the basics about this stuff, and the parents are to blame as well.
Now days it seems that my kids think they should have the very same things that I have. The difference is when I was their age I didnt have it and now they are learning why.
When young I made my share of money mistakes, mostly out of ignorance. You might think you can afford something until you lose your job or some other unforseen thing happens. I say if you dont have the cash to pay for it and still pay your bills, then you cannot afford it.
When I was maybe 28 years old my Father saw a watch I had purchased.
He asked me how I could afford it.
I told him that I paid cash for it.
He replied: "I didn't ask you how you paid for it - I asked you how you could afford it".
There is a huge difference between the two.
We have always only bought what we can afford,our first house was a 2 bedroom 50 year old cottage in disrepair,I wanted to be a stay at home mum so this was it,eventually we moved to a 30 year old 3 bedroom house,now we are in a 25 year old
3 bedroom house with a fully self contained granny flat underneath,
We worked our way up slowly,and we now own our house.
When we bought the third house we were told we could borrow $750,000,I just laughed and said are you going to make the repayments,
I married a squirrel. My husband would gnaw off his right arm before living above his means. He wouldn't be able to sleep at night with the anxiety it would cause. You should see the jalopy he drives! My husband has a fairly prestigious job--------- all of his friends make fun of him about his wreck of a car. Now me, I could get myself in trouble. I never have, mind you, but I know myself and the red flag of shopping temptation that can overcome me.
I am always surprised when neighbors tell me things. My next door neighbor just redid her kitchen. A big remodel. She tells me how much it cost and that she financed the whole thing------- like 40 grand and will make minimum payments. She then told me they are borrowing money from their parents to pay for their kids private schools. She then told me they have to do that because the bank won't give them any more money because they have so much debt. ( . . .but they do have a really nice kitchen . . .) My other neighbor told me that they almost had their gas/electric turned off for nonpayment and she ordered on line 80 dollar boots (about 10 sentences apart).
Personally, I'm still waiting to win the lottery.
I have always been careful to try to do everything to live beneath my means, lol. Like specialmom's husband, I am a squirrel if I'm able.
I got married, lol.
I don't share this much publically...but my husband can spend money like there's no tomorrow. It's been the *one thing* about him that has driven me insane over the last year, and let's just say that a couple of months ago, the whole issue came to a head. Since then, he and I have had many talks about how money has to be spent, needs to be spent, when he's the one spending it. He's admitted that he's realizing that living by his "philosophy" of "work hard, play hard" is one of the stupidest habits he's gotten himself into over the years. In any and every job he's ever had, he's never saved anything significant--nothing that can last more than 3-4 weeks at a time, anyway.
Now he and I are at a point where we are looking for all the possible ways to cut corners in our budget, which I think is a whole new harsh reality for him. And to top it off, things are at a point where...unfortunately...I have to monitor all the spending he does and he needs to let me know what he plans to spend and when at any given time. Just today, I made him a bi-weekly budget for reference, because apparently, verbal agreements are not working too well. Hopefully things can improve soon, as he does know his habits need to change immediately--we have two children to support, my salary barely supports a family of four, and he's only employed six months out of the year because he's a college co-op.
The thing is, I've showed him we still have the ability to save if we are careful to budget what we spend. It's getting to this point that has been the challenge--for him, in self control, and for me, in dealing with anxiety and frustration.
I guess the point I'm making is that I think a lot of people who live beyond their means have this type of mindset. That money is for today. You worked for it, you can spend it because it's your money, and initially, you don't intend for it to affect anyone else. Then when it does, it's become a habit that, like any other addiction or lifestyle, then becomes extremely hard to break. Debt begins to build, but it's still hard to stop the impulses. I think those people who do live beyond their means need just as much counseling or assistence or whatever term you want to give it to break the habit of spending.
Just my thoughts, after experiencing being in a marriage with a spender.
Your marriage sounds much like mine, only it's opposite. My husband is fabulous with money...he can make sure our needs are met and we always always save. CC are almost never used, and they certainly never carry a budget. Prior to him I was not much of a saver. I love to shop and love to spend. Never really thought much about money. However, I have learned a great deal from him. Sometimes its frustrating, but as a result we have no debt. Now that we have decided I am only going to work part time, we are redoing our budget and it's tough. But he has taught me saving is so importnat and he is correct. In our house, I allow him to take control of finances. It just makes sense. I am on a sort of allowance. It works for us. And I am grateful for what I have learned. Money is the only thing we have ever really fought about.
In a fiat society where inflation is the name of the game, you always use "other peoples money".
The US government understands this very well, as you know our national debt is $13 Trillion. You live beyond your means and worry about the consequences later. In this way you always live the life that most never seem to achieve.
Savers lose. All the money you have saved will shortly be worthless. Take that to the bank.
Trump has filed bankruptcy 4 times, count em 4.....
California default soon.
There is a website you can learn all about the federal reserve and debt, just google it.
As we print money, money then becomes debt, no biggie right? But that debt carries an interest rate. NO money is ever printed to circulate for paying back that debt. Thus the Government must create inflation (a tightrope act) at a rate of about 3% to keep printing money or debt to allow that cash used to pay interest. Technically it can't keep up with the interest so companies or people MUST file BK to flush the system of that interest debt.
The system is rigged to force BK's, they have to happen. Once you understand the system you reap the rewards.
I dont think some people have the option of living above their means these days either. Ya know, when your married, got kids and by the time you provide the housing, utilities, insurance, food etc. What is left? It takes two households these days to pay those and I always said when you got kids you got no savings account. I think that is more the norm than we like to think these days. Maybe this is how people get into credit card debt. If you cannot afford the basics and picture day comes up at school, or an unexpected expense like the dog gets sick, I gess it makes sense they would get into trouble with credit cards. Thinking out loud here.
Oh, I agree Teko (and that was actually a lot of what I was talking about). They've made credit harder to get which is probably a good move as when it is easy to obtain, it can be abused. I also think a lot of people are in debt just trying to live. But there are a heck of a lot of people (know many myself) that have "the life" and a huge amount of debt to go with it.
"They've made credit harder to get which is probably a good move"
There lies the problem. When credit was easy to get, it was "means", now that credit is more difficult..you get the picture.
The problem now becomes, awhole lotta peoples can't get more credit(means) to pay back their borrowings. The system needs to flush it out and it is.
I do think so many of us want what we want and we want it NOW, Mike is right there is a huge difference with how you pay for something and if you can afford it, even if you pay cash.
We as a nation have become consumed with keeping up with the Jone's and having all the newest greatest gadgets and big screen TVs. I know of one couple that filed bankruptcy and a couple months later they bought a 60” LED TV for over $2,000 because they “wanted it”.
At the risk of sounding like a broken record we have also opted to buy the cheapest to get what we want now and so much of the cheap stuff is made in China and so the jobs that WE use to have is going there. So we buy lots of stuff extending ourselves using credit cards, the stuff is made in China, the company we work for can no longer compete with their labor cost, our job is eliminated, we can’t pay the credit card bill for all the stuff.
I remember back in the 70's as I drove my Ford Pinto seeing Toyota's, Honda's and the like thinking wow, why send $300 a month to a foreign country and not keep it here in the US. It was because we became lazy and built alot of rubbish. Japan built to last, cars at least. We have lost our insentive to be the best and stay the best.
I look at something so natural for us here, apples...I go to Von's and see their 100% juice that says product of China..whaaaaat?
People know we are losing our middle class completely and we will soon have to compete with emerging markets and their wages. People get it while they can now (goods) because they know whats coming. At least when the house is full with grandpa, ma, sons, daughters, grandkids, nieces and nephews all working to keep the home afloat, they can enjoy 30 mins of tv commercials in an hour long show :)
I just heard that because of a bad year for grain, food prices are on the rise up to 23%. Well, I dont know where they been cause food has been on the rise for awhile now. Last excuse they used was an increase in oil, thereby costing more to get it to us. Gas is going up again too, paycheck stays the same. Middle class? What middle class? Your either rich or you work for the rich. Look at the good side! It might bring the families back together, reduce divorce rates and bring the country back together again! NOT!
America has simply gotten greedy in wanting what is theirs and everyone elses too.
Middle class...heh heh I'll buy that, I think I've fallen and can't get up.
I know find myself shopping at the 99 cent store to the tune of about $40 a week trying to cut corners where ever possible on the grocery bill.
I know I'm down when I have to get my son a job here in LA with unemployment pushing 20% realistically. Two incomes to run a house? I am now prepping my son, learn to help your mom and I out. He brought 3 pizza's home the other day, the $5 buck ea. ones. I was very proud of him. Wish they taught that in school.
On the rich front, there packing it in as we speak, at least the one's I deal with. No new jobs, mostly shut down business and try to sustain their lifestyles. Party is over, it's all about survival now.