Thursday, September 25, 2014

Living Within Your Means

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Today the ladies of the Babywise Friendly Blog Network are all talking about emergency preparedness topics. In the past, I have covered a lot of basics on emergency preparedness. I have talked about Food StorageEmergency Kits for the VehicleLifefolioFood Preserving, and 72 Hour Kit Tips. I have also shared ways to organize with my 72 Hour Kit Free Printables and Emergency Preparedness Binder

Today I want to go into a topic I haven't covered in the past, and that is living within your means. Living within your means is simply spending less money than you make. This is such an interesting topic to me because I think if you sit and discuss it on a logical level, everyone can easily agree that yes, it makes sense to not spend more money than you make. If you spend more than you make, then you will be in a tough spot. You will also end up paying more for things because you will be paying interest on whatever you are buying. 

Then you step away from that conversation and you find yourself living real life. You find that you see something you really want, and you want it now. You think about all the reasons you need it now. You think about how much easier your life will be, how much more enjoyable life will be, or how it will basically not be worth buying it in the future. 

The next thing you know, you have purchased something on credit and you have extended yourself beyond your means. You now have interest to pay. 

We have to learn to control ourselves. We have to be responsible. We have to say, "I will save up my money for that and then buy it."

I like to heed advice to limit what you are willing to go into debt for. These are:
  1. House
  2. Education
  3. Vehicle
Now, with all of those things, you need to apply the term "modest" to each one. A modest home. Do not go into as much debt as the bank is willing to give you. Also, if you need to go into debt for a vehicle, keep it modest. 

So what is the big deal about living within means? Why should we care? Why not live it up?

1-Debt hurts marriages
One of the leading causes of divorce is financial problems. Many studies say it is the number one cause of divorce"According to Jeffrey Dew’s paper titled Bank on it: Thrifty Couples are the Happiest,when a spouse feels the other spends their money foolishly, it increases the likelihood of divorce by 45%" (source here). Anderson points out here that a key word here is "feels." Both members of the partnership need to be on the same page of how money will be spent.

If you have ever been in a lot of debt, you know how taxing that stress of the debt can be on your marriage relationship. Maybe you both are placing too much value on material things and letting it get in between your relationship. Maybe you fight constantly because you are both so stressed out about how to get out of this debt-binding situation. 

It is important for couples to get on the same page financially and to make a plan on how to spend and save money. 

2-You will never make enough money
I just don't think people ever make so much money that they can't spend it all. The more money you get, the more you think about spending it on. Higher incomes will equal larger homes and fancier cars. People in general can't seem to ever be satisfied with what they have.

When we were first married, we made so very little money. We were both students full time who were working part time. We lived in a tiny little thing someone called an apartment (and we believed it). We spent maybe $25 a week on groceries. We rarely ate out. We pinched our pennies in order to get by.

Today, we make a significantly higher amount of money. Neither of us feel, however, happier than we did when we were first married. Yes, we can afford more, but in many ways, we don't have a lot more free income. Our fixed expenses have grown. We live in a house on a good piece of land. We own two vehicles instead of one. We have children to feed and clothe. We have internet service and dish TV. 

Despite making more money, we are not happier nor are we able to buy whatever we want whenever we want to.

I say all of this to convince you that it is worth the discipline it takes to be willing to live within your means. Living out of it will not make you happier. Debt is binding. 

3-Money can work for you
When I was in college, I took a fabulous class called "Personal Finance." My professor stressed the importance of living within your means and saving for your future. She pointed out that money can work for you. Like I said before, debt is binding. It is a "harsh taskmaster." You can, instead, make your money work for you. You can save and invest and let the interest be on your side--coming to you instead of paying for it. If you can discipline yourself to wait to save for something before you buy it, you will find yourself paying less money for it and earning some interest along the way.

4-Letting debt take over is allowing yourself to become indulgent
If you can't be patient for something and save up for it, you feed indulgence within yourself. Learn to distinguish between needs and wants. Do not let yourself go into debt over a want. Don't do it. Spend less than you bring in and put money in savings. 

Conclusion
I know it can be super, super hard to save for what you want. Despite my extremely frugal nature and my husband and I agreeing from the beginning we wouldn't ever go into debt for a want, we have done it from time to time in our marriage. It wasn't fun. We are in a place now where our debt is our home and that is all. It is a very nice place to be. 

Even with having the experience we have, the conversations arise of, "should we just go into debt?" Should we go into debt to get a nicer camp trailer? Should we go into debt to do an addition on our home? Should we go into debt to buy a truck? Should we go into debt to go on vacation?

Happily, these conversations always end in "no" now. It is very satisfying to have a financial goal and reach it. It is much more fun to go on vacation with money you have saved. It is fun as a family to forgo certain treats at the grocery store to help us reach our next financial goal sooner (I seriously love this for shopping with my kids. "If we buy that treat, it will make it that much longer before we can go to Disneyland"--I don't get begged at anymore!). 

If you are not living within your means, I highly encourage you to start. Start paying down that debt. Cut the things you can cut. Save what you can save. You will enjoy more peace. You will be prepared for the difficulties that surely will come. You will have less, but your heart will be more content. It is so worth it.

Be sure to go check out the other BFBN ladies today for more emergency preparedness info!

Here are some resources I have found on Pinterest that are helpful:





2 comments:

maria smith said...

Such a hot topic! I agree that it's wonderful to be free of debt. Making the commitment to not go into debt for a want is about where we're at. To help I've started doing things like more baking instead of buying treats, and making my own green cleaning products.
Also trying to do more of our own mechanics, etc.

Valerie Plowman said...

Great ideas! Every bit helps. I love vinegar for cleaning and for laundry.

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