Living within one's means

[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.

I'd say the line is when you spend more than you can reasonably cover. I don't think everyone should strictly have to pay all their credit cards down to zero every month, but you shouldn't carry more than you can pay off in one year of reasonable payments based on your annual income.

Pretty much budget, Look at all your necessary expenses every month, rent/mortgage, utilities, food/gas, and then from there you can start to see how much money you've got to pay down the purchase you want to make.

A little self control. People know when they're overspent. I guarantee you these folks that are mortgaged out the ass on credit cards knew they were doing it when they did it.

People usually believe tomorrow will wait long enough for them to figure out a solution to the problem they know they've created.

~Bang

[Elessar78]

Like someone said in the first page, simply it's just not having what you pay out be more than what you bring home in income. On a slightly more sophisticated level it also involves saving and having cash on hand for when your car dies or something big.

To me, it doesn't matter whether you operate on a cash or credit or hybrid basis. I personally use cash and/or debit cards but that's a personal pref.

[Elessar78]

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.

Me? I think credit is evil. In the same sense that cocaine is evil. Credit is debt and debt is bad.

When I started reading up on personal finance the general rule that I came across was you "live on 90%" of your income. Meaning 10% of each paycheck gets stashed in the bank and overtime that 10% adds up and becomes your financial cushion when unforeseen things happen.

Also, 6 months worth of expenses where you can get to it easily (savings account). Is a good thing to have, on top of the 10% you save.

[Chachie]

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...

You are both correct, IMHO. Any person from any economic "class" can live beyond their means. It just happens in different ways for different classes. Heck, I know people who are dirt poor but think they're entitled to what the middle class has. They'll never get out from under the debt because they out their pride before their pocketbook.