Living Within Your Means

Over the past couple of years as the economy has tanked, more and more people are realizing exactly what living within your means actually….well…..means. It means not spending more than you bring in. I have watched many of my friends struggle for sometimes years to pay their debt, while at the same time racking up more debt. That is NOT living within your means.

I live in a part of the country (Bend, Oregon) that experienced amazing growth in the early to mid 2000’s.  Property values were skyrocketing.  The home we bought in 2000 for $160,000 was valued at over $350,000 at the height of the boom in 2005.  It seemed like everybody and their brother was coming to Bend and buying up property and building housing developments.  During the boom, these people were making a boat load of money and spending it about as fast as they were making it.  Anybody in the construction industry was doing very well.  The problem was that they were living at their means (or above their means), and not living within their means.  They were not putting anything away for the rainy day.  When the rainy day came  and  the bottom fell out, there were no reserves.  A good number of those people lost everything.  Their homes, their businesses….everything.  It has been very sad to watch.

I also watched people take out home equity loans and use that money to purchase toys….boats, travel trailers, fancy trips etc.  Again….home prices were raising so fast that everyone felt that they were ok doing this.  Unfortunately many of these people now owe a lot more on their homes than the current value is.  They cannot refinance because they owe too much.  I am so incredibly thankful that my husband and I chose not to do this. 

Since the beginning of our marriage, my husband has stressed the need for us to live debt free. I will admit that I have not always been on the same page with him in this area, but I am happy to say that I am now, and I am thankful for his frugal ways. Why you ask? Because while many of our friends have lost homes, cars, claimed bankruptcy, we have been ok.

When we bought our house three years ago, the mortgage lender said to us “you qualify for twice as much as you are asking for….why not look a little more”. Our answer to him was that we did not want to stretch ourselves so far that if one of our incomes went down we could not afford our home. At this time we are SO thankful that we did not go with a higher mortgage as my job situation is tenuious at best.

Another reason that I am so thankful that we are not in debt up to our ying yang is that we are able to do a lot for our kids…help them with college, send one to Washington DC this year for an amazing experience, save to send our youngest to Japan in another year. If we had huge debt, we would not be able to do these things for our children.

My advice to people is this…….do not live AT your means, live within or below your means.

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7 thoughts on “Living Within Your Means

  1. Right on, your means needs to include money set aside for emergencies, money set aside for college, and money set aside for retirement. If people saved what they pay in interest on debt to get things they can’t afford, they could save what they need.

    The Cranky Old Man

  2. I’m trying so hard. We were always pretty good at this, but last year we bought an investment property and it’s sucking the life out of me.
    I’m trying so hard to reduce costs elsewhere but this is proving a challenge. I’m sure I’ll get there, goodness knows I’m motivated. But it is very hard these days. Especially when everyone around you is spending spending spending, regardless of whether they can afford it or not.

    1. I have struggled with watching friends take elaborate vacations, while we take weekend trips to the coast, but then I realize that many are doing so on credit and we refuse to do that. We tell our kids that we don’t take the big vacations etc. so that we can afford to do things for them….sports, trips through school etc. They understand. We will be taking only our second big family vacation in 25 years this December. Taking everyong to Vegas…..and are paying cash. When I finally stopped trying to live up to others expectations and standard of living I became a much happier person.

  3. Very sensible advice everythingIeverwanted! A very hard way to learn this lesson for those around you who have lost everything. Thanks for sharing your wisdom at the Weekend Rewind x

  4. Having just reached retirement with no debt other than our mortgage, I can say first-hand that you WILL be blessed ten-fold for for the ‘sacrifices’ that you’ve made. I know that we’ve always been able to sleep well, not worrying about paying bills — because we tried to lived as you’ve described. We took our 3 kids on a nice vacation, ONCE, because I received a small amount from my grandmother’s estate. The rest of the time, we traveled to see family in other states or we went camping. We were able to hit Disneyland a few times as they were growing up.

    This is a great blog post, and I hope many will read it. My best to you.

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