Living within your means

[OrionGrad]

I hide money. Any time there's more than enough to get us through 2 weeks in the checking account, I transfer it out so we can't get at it. Then I tell myself and DH "We're broke, don't buy anything!" He knows we're not, but we both play the game. I under-withhold on my taxes so we get a big refund every year, and then it goes straight into the long-term online savings account, which takes up to 10 days to access if we want to withdraw. If there were a short-term emergency, we would use credit cards until the money transferred from savings.

Wow, you and I are like financial twinsies. I do the same thing with squirreling away money and telling DH we're "broke." I also deposit my earnings directly into savings and my retirement, and we live off of DH's salary. We use our savings for fun things like furniture, trips, etc.

[JDAZ11]

That's how it is for me. I almost have to stay out of stores to keep from spending on crap!

It's true. I did need a doormat, and the script wasn't covered by insurance. But I also got a little rug for inside the door that I probably didn't really need...

Sadly, it's by far my best pharmacy option. The only drive-thru pharmacy here doesn't take our insurance (oh, as I'm writing this - I guess it doesn't matter since I pay out of pocket for that script anyway.). So maybe problem partially solved! I won't get out of the car next time!

But right now living within our means is not too difficult. We don't have children and we don't have a house - and DH has finished training. So we have a certain amount that goes into savings every month right after DH gets paid, and then at the end of the month we decide how much extra to move. Any money I make, plus the extra income DH gets goes directly into savings. We also pay off credit cards every month. USAA has a feature similar to mint, and then I have a budget spread sheet that I update every month. Oh we also don't have car payments, which is really nice. (Although we should consider a new car soonish).

In general I suck with budgets, but DH is really good at sticking to them - so it balances out

But we do still have loans that we over pay a bit on every month. We plan to pay large lump sums after he gets his bonus, and then do that every year. We know that we should probably pay those off before buying a house, but it just doesn't seem like the best plan considering how high our rent is and the current mortgage rates. So we probably don't even really live within our means since we are sitting on a crap load of student loan debt.... So fun to think about. Blah.

[MsSassyBaskets]

Wow, you and I are like financial twinsies. I do the same thing with squirreling away money and telling DH we're "broke." I also deposit my earnings directly into savings and my retirement, and we live off of DH's salary. We use our savings for fun things like furniture, trips, etc.

Ha ha! Good, I don't feel crazy now. It's not highly technical, but it keeps us on a short leash and it works!

[ides]

Yes! The less I go to stores, the less I spend! I try to grocery shop once a week with a list. I often end up stoping by once more in the middle of the week and I always buy xtra stuff.

It's incredibly hard to live within your means if you have several kids or don't make enough to cover the means, or live in a high col area.

We had a spell or two before training ended where we managed to not incure debt and save a little. It's much better now, being out of training and living beneath our means. We bought a house half of what we could afford purposely. We also drive old used cars that we owe nothing on. We also have a ban on new expensive stuff like computers, tv, etc unless one breaks then we often get refurbished products. Our CRT tv is still going strong- lol!

Its worked well for us as when necessary expensive stuff comes up we have the money (installing a storm shelter, oral surgery).

[v-girl]

We royally suck at this. The kids suck our bank account dry. It's completely embarrassing.

I do best when I log and check our spending daily. When I'm not watching the balance closely money seems to fly out. Life is expensive though. We don't live a crazy lifestyle, but we don't have a lot of extra cash to burn either.

This is us. I told DH I'm going to start being the mean parent and saying no to every request for fast food. The problem is that we are in the car during meal times so often or the girls get out of dance and are starving. They are just going to have to wait or pack a snack for after class each day.

[houseelf]

Geesh, I could write a novel about this! This reminds me of when Dave Ramsey quips: "Act your wage!" (Side bar: I've thought about ranting about some of Dave's advice but that's another thread. I'm pretty sure that while his overall message is good, it really isn't geared to the specific demographics of this group).

To answer the question at hand, in some areas, I'm a phenom at money management. Really. I'm not a shopper, we eat at home, we typically aren't into competing in affluenza type stuff. In other areas, I am absolutely terrible with money. Like, get me into money makeover rehab right now! I'm a sucker for experiences: travel, activities for the kids, camps, girlfriend getaways, blah, blah, blah. I hope that the nutrition rule (80% clean eating will keep you at maintenance) applies to money management. I'm like Cheri in that I check all of our accounts daily and I'm the queen of automatically withdrawing/and or making payments on a big ticket items like a vacation. (How the hell else does anyone go on a Disney Cruise?)

My dirty, dark truth is that I need to face both my childhood "scraping by" mentality, as well as my early marriage in which medicine habituated us to debt. To this day, I tend to think about paying down debt far more than saving/investing. I'm conscientiously trying to change this, but some of these money lessons are sort of embedded in the psyche, you know?

Honestly, what helps is that DH is not a spender at all. Seriously, the man doesn't spend cash and buys things used. He splurges once every few years and thats that. He also earns a good amount of cash. What kills us is student loan debt and taxes. It is ridic. We throw lots of extra cash at those things and they budge little by little. We are trying to pay it all off in the next 2-3 years because our oldest will go to college in 4.5. Sad, really. We're going to pay for college our whole life.

Clearly, money is very emotional for me. I have a bit of scarcity complex. We'd better do that TODAY!!!

[mommax3]

Things in our favor:

1. DH keeps us in line, and I am grateful that he does. I would like a pool and a boat and he has let me know that we can't afford it.

2. I work full time and live in a little town with no shopping and no time to drive that far.

3. We drive our cars until the wheels fall off and own three cars but don't have a car payment.

4. If we don't have cash for it, we don't buy it. Period.

Things we struggle with:

1. We eat out. A lot. Not so much because the food is so great, just because we are out running to practice or a meet and it's time to eat.

2. We take nice vacations. As a percentage of our income, it's not that much, maybe, but it seems like a lot. I don't care.

I want to say that any good habits we have took time to acquire. We still aren't where we would like to be, but we have come a long way!

[poky]

I'd love to give advice, but don't really feel like I can. No kids, no debt of any kind, and two incomes makes it *really* easy to stay "within our means" - I'm embarrassed we haven't saved more than we have. We're not big spenders, but we definitely don't save as much as we could.

[spaz]

Ok Kris... one step at a time. Big plans will not work..

Do you know where ever penny of your money goes? If not, that is step one. If you can, go back to January1 and account for everything you've spent and then continue . At the end of this month, post exactly where the money went. That is step one. Figure out where you are. Write down how much you owe. If you are not paying the balance on your credit card each month cut them up.

Step 2, which I guess you could do while you are doing step 1 is to write out goals. We want to save xxx for each child's college, etc.

That is more than enough for a first step.

[alison]

Kris, do you guys see a financial advisor? We have one whom we see every 2 years or so, and having to comb through our expenses and actually see where stuff goes is extremely helpful.
It's embarrassing to actually SEE in print how much we spend on crap (mostly eating out).

[reciprocity]

For us the trick has been fighting against lifestyle inflation, which we've been pretty good at during med school. I got a big bump when I went from SmallLaw to BigLaw, but we still have an apartment in the same range, and we still have the same car (one car, bought with cash) and when I paid off my law school debt last year, every dollar that used to go to debt instead goes in savings.

Of course in six months, this all goes out the window, but for now...

[ladymoreta]

I also feel like I'll never get to the responsible with money stage. We save, we pay off debt, we cut back on eating out so much that our kids don't behave well when we take them somewhere, and we still get hit with surprises that get us off track. Big surprises. Our pest control found termites - $1500. MIL had surgery and we had to fly back from our (saved for and paid for) vacation a day early - $800. Just got DH's W2 (or whatever tax form he gets now), and it looks like we didn't withhold anywhere near enough - probably going to have to make payments on that. I just feel like we can't win. We had a nice savings amount, and it's pretty much wiped out. Again. I have paid off several credit cards, and now we'll be getting a "loan" from Uncle Sam. I just want to give up sometimes.

Anyway, my rant is over. Our best trick that's helped has been to live in a place that costs much less than we could technically afford (according to lenders). Your home determines so many other expenses, and we especially saw the difference by living in the cheapest house of DH's residency class. We had so much more free income, not just from house payments, but also utilities, decor, and the feeling that we didn't "need" to upgrade our cars yet based on our neighbors.

We also pay ourselves first, into debt repayment outside of minimums, savings, and retirement. It's just never enough.

[PrincessFiona]

We go through phases where we're good ... and these phases involve me taking lists to grocery stores, paying mostly cash only, and not stepping foot in say ... TJMaxx. I'm actually the good one. Ugh. I say that, but the other day when I wrote this post, I was frustrated with myself because I went to TJMaxx to buy another winter coat for Amanda. I also found two large coffee mugs, coffee syrups, a lunch box for myself, a scarf and damn ... a shirt and jacket set. I've been looking for a certain type of top to go with a favorite scarf that I have but have never worn. Darnit. So, I planned on spending $40 and spent $140. Gaaah. It is the reason that I generally stay out of stores.

Our problem is that the kids bleed us of money...truly ... and that Thomas and I seem to spend fairly freely if we go into a store. Thomas complains constantly "our overdraft is terrible" and then comes home from Target where he went to get milk only, with videos, drinks, chocolate, etc. I'm all "no more spending, damnit" and then I go to TJMaxx and ... well, I already told that story.

We talked about it again this morning because I feel like we are simply throwing money away. We are.

I think we are in a good position with our retirement funds, but in general we have no savings. Anytime we get anything put away, the hot water heater leaks, a furnace breaks ... you name it.

We still have to replace the floors from where they have completely lifted up and warped due to our hot water heater leaking. We have to be able to save for that. Also, my van has 202,000 miles on it. It's just waiting to die. I'm hoping to drive it until the wheels fall off, but I'm afraid it will be sooner rather than later. When we were being responsible, we saved up and actually paid cash for it used years ago. Now, we have nothing put away for another vehicle.

Responsibility, people. What is wrong with us! Ack!

Kris

[spotty_dog]

We have something of a convoluted system, but some form of it has worked for us for many years. Basically, we pay ourselves first (retirement), then mortgage/utilities/credit card. (Everything goes on the credit card, EVERYTHING.) What's left goes into savings. When the savings floweth over, we shunt some off to investment accounts and call it sort of second-tier retirement, or we start planning for a major expenditure like a car/vacation/home improvement. Two to four times annually some of that excess goes to college savings. Taxes come from the same pot, but that's just quarterly and predictable which is nice.

So basically, the motivation to build that savings buffer is a decently big part of what keeps our purchases in line. Post-training we didn't buy anything for the house, didn't buy a new car, nothing major until we had our savings in order.

It's also motivating to keep an eye on the bottom line of net worth. It's a great exercise to go through and add up all your assets (every checking, savings, retirement account, plus a fair guesstimate on the value of your house and other property) and then all your debts, a snapshot right at this second that includes the current credit card balance and every student loan and mortgage, and see where you stand. If that number isn't growing (or becoming less negative), you're just treading water -- or worse. Quicken shows us a rough number that we can check regularly, but every year I like to get a more exact picture, a snapshot on December 31. I'm about to do that for 2013...this is great timing if anyone else wants to do that self-check too.

Honestly, an emergency fund is so important that it's almost worth suspending retirement contributions for a while as you build it up. At least to the point where you have a little something in the bank, I think DR says $1000? And then after that, find a way to skim off the top of each paycheck until you've got 3-6 months' expenses squirreled away. Just that move alone can give you so much freedom, knowing that if something happened to the wage earner or his job you'd be okay; knowing that if you need a roof suddenly or a car dies beyond repair, that you don't have to go into debt.

[JDAZ11]

Wait, DR says $1000 for an emergency fund? (He does, I just googled it). Wow, I swear I thought you were supposed to have more like $100K. (Which seems like a lot, but I swear I've read that multiple places). Ha! Well super. Glad we've been putting off having kids and buying houses because I thought we needed like a $100k cushion. I clearly need to reread some financial planning books!!!