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Living within one's means


stanleys

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How do you define living within ones means?

Is it paying cash for everything you buy? Being able to pay cash for everything you buy but choosing not to for whatever reason? Being able to meet your monthly payments? At least meeting the minimums on credit cards?

To me it means payng cash for every single purchase in life. My "means" allow me to buy X, I want it so I buy it or save enough to buy it without asking anyone else (bank or other credit institution) if I can.

I can see how others would have a different definition though.

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How do you define living within ones means?

Is it paying cash for everything you buy? Being able to pay cash for everything you buy but choosing not to for whatever reason? Being able to meet your monthly payments? At least meeting the minimums on credit cards?

To me it means payng cash for every single purchase in life. My "means" allow me to buy X, I want it so I buy it or save enough to buy it without asking anyone else (bank or other credit institution) if I can.

I can see how others would have a different definition though.

I think its just knowing what your limits are. You should set a budget for yourself and not spend more than that a month or whatever. If someone is making $1,500 a month and say $1,000 of that goes to paying rent, utilities, car, and whatever else. That doesn't mean you take that extra $500 every month a buy a new tv, clothes, cell phone, etc. Save some of that moneyfor a rainy day. I'm not saying you can't go out and buy things every once in awhile. But just because you have money doesn't mean you should spend it all at once. I'm trying to break myself from that habit. If you can't afford something then don't buy it. Putting it on your credit card and making the minimum payments everything month doesn't always work.

Also, I think the biggest problem is people see all these new things that come out and they need to buy the latest and greatest. If what you have works fine, then don't spend money you don't have on something you don't need. For instance, computers get better and better every day. If you bought a computer last year and it works perfectly fine and does what you need it to do, don't go spend another $1,000 on a new just because its newer. That's how people get into trouble. We're constanly trying to live like rock stars, but most people aren't making rock star money.

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I lean towards the cash approach these days too, mostly due to my lack of control in my younger days when I had a credit card burning in my pocket. I really learned the hard way and it took multiple lessons.

To me, "in your means" is both ability to pay in full, and when you cant, debt to income ratio.

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I dont pay for everything in cash. I utilize credit all the time. But I have a budget and I stick to it.

I moved in with my g/f about a year ago. During that time ive financed a TV, a huge couch, and an entire bedroom set. Each cost us about $250 per month. Bought the TV, paid it off in 6 months, then went and got the couch, paid it off in 4 months, now im working on the bedroom furiture.

Meantime, im still paying off CC debt ive built since college. Ive paid off about 1/3 of it in the last 18 months and now only have one card with balance.

To me, living within your means means having discipline. Debt is fine if you can manage it. And by "manage it" i dont mean simply being able to tread water.

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So I"m wondering...those who "need" the latest/greatest...do they do it for themselves or to show off to everyone else?

I think its too show off. I think alot of that has to do with MTV Cribs. Sounds crazy, but before that show, who wanted half the stuff those celebs had in their houses? Does someone really need a TV in every room and a movie theatre in their house, not really. But after people saw those things they had to go out and buy them.

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There is nothing wrong with credit, and we all know that it would be very difficult to get by without it. I would define living within one's means as not abusing that credit on things you ultimately can't afford without rolling over more credit to "pay" for it.

If the fridge goes up in smoke tonight, some of us can go right out and pay cash for a new one, many of us can't. In that regard, having good credit and enough of a balance to cover it is a good thing, so in my mind, living within one's means is about not finding yourself with your ass hanging in the wind because you overspent on other stuff.

~Bang

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There is nothing wrong with credit, and we all know that it would be very difficult to get by without it. I would define living within one's means as not abusing that credit on things you ultimately can't afford without rolling over more credit to "pay" for it.

If the fridge goes up in smoke tonight, some of us can go right out and pay cash for a new one, many of us can't. In that regard, having good credit and enough of a balance to cover it is a good thing, so in my mind, living within one's means is about not finding yourself with your ass hanging in the wind because you overspent on other stuff.

~Bang

man the firdge going out would be great for my diet!

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It depends on how much money you make.

It is easy for me to say people should live within their means, since I make a professional salary and so does my wife. If people like me can't live within our means, we are total fools.

For someone closer to the poverty line, I think it would be very very difficult to live safely within your means. As soon as you have an unexpected expense (car dies, health care bills, lost job, leaky roof etc) then all this talk goes out the window and you just have to scrabble to get by.

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There is nothing wrong with credit, and we all know that it would be very difficult to get by without it. I would define living within one's means as not abusing that credit on things you ultimately can't afford without rolling over more credit to "pay" for it.

If the fridge goes up in smoke tonight, some of us can go right out and pay cash for a new one, many of us can't. In that regard, having good credit and enough of a balance to cover it is a good thing, so in my mind, living within one's means is about not finding yourself with your ass hanging in the wind because you overspent on other stuff.

~Bang

I agree with you that credit isn't an evil and hope I didn't come across that way. There are times when I can see that it's justified.

Where do you see the line though? I understand that no one should find themselves with their ass hanging, but that brings up the question of how far below one's means should someone live to keep themselves from having that occur to them should something unforseen arise.

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Cheetos don't need a fridge, I have discovered.

:munchout:

~Burp*

Hey, since you brought it up, I have a question (for you or anyone else on the boards)

A couple of weeks ago, I was teasing a neighbor kid of my brother-in=law about his cheeto cheese covered hands and face.

His mom started flipping out on me calling me racist, bigot, etc.

I had no idea that mentioning cheetos was a racist thing? Is it really?

I just thought the little bugger looked funny with that crap all over him!

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It depends on how much money you make.

It is easy for me to say people should live within their means, since I make a professional salary and so does my wife. If people like me can't live within our means, we are total fools.

For someone closer to the poverty line, I think it would be very very difficult to live safely within your means. As soon as you have an unexpected expense (car dies, health care bills, lost job, leaky roof etc) then all this talk goes out the window and you just have to scrabble to get by.

I disagree with this somewhat. I see more people with a decent income live well beyond their means than I do the poorer elements.

I think certain upper middle class people are some of the biggest abusers because they view so many things as beneath them...a less than new car, not having the spare bedroom...

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I disagree with this somewhat. I see more people with a decent income live well beyond their means than I do the poorer elements.

I think certain upper middle class people are some of the biggest abusers because they view so many things as beneath them...a less than new car, not having the spare bedroom...

The Mcmansion folks. I agree completely!

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I think it's wise to go by percentages.

In my mind living by your means means this. You've budgeted for your major items (mortgage or rent and it's not outrageous, 35% or less of your gross) any loans you may have, your utilities, not including cellular or tv, be it cable or dish, or Internet. Then you budget your daily's such as gas, food, etc... You should budget around 10% for cash. Once that's done then you can look into your car note, your cable bill, cell phone, recreational activities, entertainment, dining, shopping, etc.. Make sure you are putting away at least 7% for retirement (if matched) and then another 10% at least in some investment vehicle, even if it's just a savings account. I think if you can meet that, you are living within your means.

Whatever else you spend on is appropriate but I think the key is making sure you stick to the 10% cash rule and you are saving for your retirement. Anything such as HBO or your car note that impedes you from meeting that is living outside of your means. If you have to finance your monthly expenses with credit, you are obviously living above your means.

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I disagree with this somewhat. I see more people with a decent income live well beyond their means than I do the poorer elements.

I think certain upper middle class people are some of the biggest abusers because they view so many things as beneath them...a less than new car, not having the spare bedroom...

I think that's a pretty broad statement with which to describe a large percentage of this country.

I think I'm upper-middle class, have the spare bedroom, but don't view anything as beneath me. We do a very good job of living within our means given we've recently had two kids and bought a new house (all in the past 3 years).

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I think that's a pretty broad statement with which to describe a large percentage of this country.

I think I'm upper-middle class, have the spare bedroom, but don't view anything as beneath me. We do a very good job of living within our means given we've recently had two kids and bought a new house (all in the past 3 years).

I did say "certain".

I didn't mean to impugn every upper middle class person but I think even you must agree that there is a sizable percentage of your neighbors that are overreaching.

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I disagree with this somewhat. I see more people with a decent income live well beyond their means than I do the poorer elements.

I think certain upper middle class people are some of the biggest abusers because they view so many things as beneath them...a less than new car, not having the spare bedroom...

Yeas. I acknowledged them in my post.

They were the "total fools" I was talking about. :D

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I did say "certain".

I didn't mean to impugn every upper middle class person but I think even you must agree that there is a sizable percentage of your neighbors that are overreaching.

Most likely, but I'm not sure how to quantify how many upper-class vs. how many upper-middle-class vs. how many middle-class...etc. are overreaching.

For example, the latest trend spreading across my street is irrigation systems. For about $3K you can get that done. It's certainly not a necessity, but a luxury. I'm sure a couple people who are buying them this spring would be better off NOT buying them.

Across the street in the condos, everyone is buying nice TVs and game systems...probably totaling $1500. I'm sure the same percentage of people there are reaching...

Just because $3000 > $1500, I'm not sure it's obvious who is reaching more.

See what I mean?

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