Do you live below your means?

[speakeasy]

I think the people who will best weather this recession are those that live BELOW their means, and especially those who live WELL below their means. The people who could have their income cut in half and still maintain the same lifestyle. Seriously, I don't know how there can be so many people that live from paycheck to paycheck and still sleep at night and not have any buffer in case they lose their job or disaster strikes.

Have you ever heard of Parkinson's law? It basically says, "The demand upon a resource tends to expand to match the supply of the resource." In the real world, it may mean that if someone is making $50k a year and living paycheck to paycheck and you were to increase that person's salary to $75k a year, they will probably still end up living paycheck to paycheck because they will upgrade their lifestyle to whatever their new salary allows since we are programmed by mass media to be consumers and associate happiness and success with buying every more expensive items.

I made X amount before I quit my job a few years ago. I lived comfortably. I began freelancing. I make substantially less now but the freedom I have more than makes up for it. You know what? I live just as comfortably now as I did with a higher salary. I throw less money away on useless things like paying $20 covers to get in a club and pissing money away on $9 drinks. I'm not out shopping for new clothes every weekend like it's a hobby. I've learned to be happy with my 2001 vehicle instead of getting a brand new car.

 

[ketostix]

I agree people should live within their means or below it. But if everbody did that the recession would be prolonged and worsen. I personally value my time more than I do using it all up working to earn more money to buy things I don't even need.

As far as the economy, I think the real problem isn't that people aren't living below their means. That keeps the economy stimulated. The real problem is all these foreigners and foreign nations are using the American consumer to fuel their wealth. If it all stayed in the US economy, it would mean plentiful jobs and opportunities. So in that sense I do live below my means because just about everything is manufactured in China now and I'm not interested in enrichening China with little to no opportunities created in return.

 

[speakeasy]

I think the recession could worsen in the short term, but sooner or later people would adapt to the new reality. Japanese consumers have a much higher savings rate than us, but since their economy has adapted to it, they don't suffer from it.

 

[PRMoon]

I've always lived below my means. I could have blow alot of the money I've made on a really big house and a fancy sports car(s), but instead I have and am bulstering my savings as much as possible. Most of my family is the same way, my grand parents were living okay but not really killing it when it came to money. So my parents aunts and uncles learned to live okay, then opportunities came their way that weren't possible for the grands and they started making bank. So all of a sudden they had all this money and as they got older and wealthy, they got nicer things but were still behind the money they had.

I am an exact copy of that model. I live okay. I have nice things but none of it is extravigant. I took some knocks when I was younger and learned to hustle for better work and more money and I'm still doing it now. I just got some new contracts for crazy money but I'm just gonna put it away and stay hungry. If I turn and make millions upon millions then I MIGHT buy the pinnicle of my wants but only if it's less then 10% of my wealth. Don't throw money at the here and now and have no future or back up incase sh*t happens.

 

[STR8UP]

The problem with living below your means is that it is based on contraction instead of expansion.

Which has more potential- trying to save as much as you can, or trying to increase your cash flow? Once you hit 100% saved (which is impossible for most people) there is nowhere to go.

I prefer to concentrate on expansion. I would rather be a billionaire who saves 1% of what I earn than a guy making $50k who saves 50%. One is painful, the other is life worth living.

Realistically you will end up somewhere in between, but the closer to billionaire or even millionaire you get the better. Then you NEVER have to worry about money.

 

[Teflon_Mcgee]

I live below my means.

But, in agreement with STR8UP, this is merely a means to an end for me.

I have plans to make money but I need capital (and time) first.
Capital comes from living beneath my means.


I think some people get carried away. Why be a tight wad your whole life, put all your money in savings, live like a poor person, and then die?

I'd rather live poor temporarily, make alot of money, live with a little style and luxury, then die.

 

[f283000]

I think it depends on what you mean by living below your means.

If you go shopping every weekend it means you still haven't developed mentally and spiritually beyond denying your cravings for material goods. Most people go shopping just to satisfy that craving not that they actually need that extra shirt in the closet.

EAT WELL: You can go ahead and save on everything else as long as you don't become a cheap a$$ to the point you are eating canned beans everyday to save money. While I may only go shopping maybe once a month and not buy expensive drinks at the clubs or rarely buy beer, I enjoy treating myself to decent food at restaurants anytime i feel like it. I am not the type that is going to make a sandwish the day before and take it to work/school for lunch to save money. Sure i can make food for myself when i'm home but when im out of the home i'm letting someone else cook for me. You only live once so eat good and never deny your heart its desire to have something delicious

NO BUS: Another one would be driving. I refuse to take the bus to save money. If i want to go somewhere I want to get there and get there fast. I am not going to sit in a bus and waste an hour of my time to get somewhere just to save on gas.

To me those 2 are the most important things when it comes to having a good quality of life.

 

[piranha45]

i concur with f283000.

 

[taiyuu_otoko]

The problem with living below your means is that it is based on contraction instead of expansion.

So if I increase my income by 50% per year and increase my expenditures by 49% per year, so that my income is increasing AND my savings are increasing, is my model based on contraction?

 

[OzyBoy]

I live well below my means. I am living on about 35 per cent of my take home income at the moment. I could probably live on less but i would be a real cheapskate if i did that. I may up my standard of living a bit later on but i just want to save at the moment and live like i am almost poor. :crackup:

 

[Cry For Love]

But if everbody did that the recession would be prolonged and worsen.

GROWTH comes from SAVING capital and INVESTING IT. The more people spend, they less they can save and use for investment.


Great info on this common economic fallacy:
http://q.x10hosting.com/

 

[ketostix]

GROWTH comes from SAVING capital and INVESTING IT. The more people spend, they less they can save and use for investment.


Great info on this common economic fallacy:
http://q.x10hosting.com/

Oh bullsh!t. The US economy is mostly fueled by consumer spending. Investing is really just another form of money circulating and changing hands. But it's not as broadly dispersed as the consumer market, and if you think about it people invest where the most consumer money is going anyway. Production and consumption is the heart of a strong economy. I'm not even going to get into how over the last 10 years in aggregate the market lost investors money. That's right money that was invested changed hands but the average investor lost money and received no real goods or services in the process.

 

[Cry For Love]

Oh bullsh!t. The US economy is mostly fueled by consumer spending. Investing is really just another form of money circulating and changing hands. But it's not as broadly dispersed as the consumer market, and if you think about it people invest where the most consumer money is going anyway. Production and consumption is the heart of a strong economy. I'm not even going to get into how over the last 10 years in aggregate the market lost investors money. That's right money that was invested changed hands but the average investor lost money and received no real goods or services in the process.

spending prevents capital formation. read the comic man it explains it.

 

[ketostix]

spending prevents capital formation. read the comic man it explains it.

OK lol when consumers stop spending and companies go bankrupt there goes your capital let alone growth. Ever heard of Chrysler? Without consumption there is no economy.

 

[Cry For Love]

OK lol when consumers stop spending and companies go bankrupt there goes your capital let alone growth. Ever heard of Chrysler? Without consumption there is no economy.

the capital stays in people's pockets and deflationary forces & decreasing interest rates due to increasing savings give them more purchasing power to use on whatever good they wish, which in turn increases consumption. the point is: it goes into an equilibrium. the economy doesnt collapse when people decrease spending, just inefficient companies which do bad business go bust and capital & labour is freed for more productive uses.

i understand what youre trying to point at is the "paradox of thrift" which isnt a paradox due to the reasons i mentioned.

 

[pLaYtHiNg]

I'm living well below my means, practically from paycheck to paycheck. I barely make enough to save and the hours at work are ridiculous. (Literally, like 16 hours a week). I was out of work for 5 months, then got hired on part-time and am still looking for another job.

f28300 - You made some very good points, and I agree with you. If you think about $2.00 for the bus, and two hours of your time, it's a better investment to drive yourself, especially if you have an economical vehicle, or work graveyard shifts, (like I do), then the bus really isn't an option. (I hear some cities have 24 hour buses though).

Time is money, however, I would ride the bus for leisure, and definitely not for grocery shopping!

 

[Da Realist]

Really, I wouldn't call it linving below your means. It more about learning to become flexible and learning the true value of things. The people who live pay check to pay check are locked in whatever lifestyle they have while people who live "below their means" have a choice. Think about it: you can use the money you saved up to take trips or buy that new house. On the other hand, someone living paycheck to paycheck is spending their time paying for stuff they may not need. That's where learning the true value of things come into play since you can save a lot of money in the long run. I may not need a new car if all I'm doing is going to work all the time. No need to spend money eating out if you can make the same food for cheaper. My job is a bit more dynamic that anothers, so I may make a lot of money at one time and less at another. As a result, I've been trying to get to where I learn to live how I would when I don't have as much money so I can save when I do have it. That way when it changes again, I still have enough to live comfortably.

 

[Lion]

Save or work harder/get a higher paid job to obtain an object of desire.

I have read that it is important to have objects of desire if you want to become rich. You will find a way of expanding your means if your desire is strong enough.

I have been a saver.