Live Within Your Means - or suffer

If you learn to live within your means, you'll enjoy a life filled with greater peace of mind.

I can't think of anything more frustrating or tormenting than debt hanging over my head. Part of my life involved living through terrible times with creditors calling and me trying to make ends meet.

The suffering that goes with being in debt has been viewed up close and personal by this writer because I allowed my finances to become over-extended.

If you've read much of the material on this site, you're probably thinking that this sounds out of character for me. It certainly does because it is very much out of character.

Although I accept responsibility for my years of financial failure, I have to add that I had lots of "help" getting to the financial bottom. And, that's part of the suffering as well.

But that's not all. There's plenty of suffering on the way back up too. It's a bit like getting stuck with a fish hook. It hurts going in, coming out and healing up.

And, the mental anguish never ends, at least not for me. I'm still bothered by it years later. It was all avoidable. I'm way smarter than that, and it was all so much more work than it ever had to be.

Live within your means and you won't have to go through what I did.

Obvious - isn't it?

To live within your means seems like one of those common sense no-brainer concepts doesn’t it? We should keep our spending well within our earnings. In spite of its common sense appearance, I have known plenty of people that spend every dollar they earn. In other words, their approach to personal finance stinks.

I remember one woman in particular who couldn’t have any money in her pocket. If necessary, she would take someone out to lunch in order to spend her money. Wow! That is quite an unusual approach to personal finance.

I can’t say that this person was addicted to spending money, but she certainly had a problem to deal with. I recommend direct deposit and some serious counseling if you find yourself in a similar behavior pattern.

And, I recommend you find other company to keep if you know of someone like this and don't want to get caught up in their madness.

The Challenge

The big challenge as I see it is money management. Some people just don't have a clue. They'll never get a clue. And, you'll never teach them either. I know from personal experience.

If you want to meet these people, just spend some time in a bankruptcy court listening to cases being heard. Or, sit outside the offices of a bankruptcy attorney and watch the people come and go. Pay attention to the looks on their faces. You'll see many that are crushed, shattered, bewildered and desperate.

The big challenge is that money is a resource that can be tricky to handle, and for some people it's easy to be fooled into thinking you know how to handle it. Even though money is very much like any other asset or resource, it's different in these ways:

• Unless you're dealing with cash, it's rather intangible. It's just numbers, and sometimes just numbers on a computer display. How unreal is that?
• It takes many different forms - metal, paper, plastic and promises.
• We create the resource "out of thin air" simply by writing a check. Higher numbers provides a greater resource out of that same "thin air."
• An advance can be given to ourselves simply by writing a check for funds we don't have in the bank yet.
• We can issue ourselves a loan by using a credit card to make a purchase.
• Expenditure of the resource can be sequenced simply by the date we place on the check.
• We can cause the resource to expire simply by placing an expiration notice on the check.
• It's possible to allow ourselves to retreat from our obligations to pay simply by canceling a check that we've written.
• Money can be transmitted by "wire" or "electronically." Something that only electricity used to do.

With all those complexities before us, is there any wonder that some of us have trouble handling money? It seems like quite a challenge to manage, and all the while we're told "live within your means."

I think the answer is to simplify your approach to money. Limit yourself to what you know how to handle well.

My Suggestions

When I think of "live within your means" it seems real simple to me, so I'll tell you what I'd do. Here are my six suggestions - easy to read and understand (I hope).

1. Put 10% of your income in savings for emergencies. Do this every time you get paid. Use this money only in an emergency, and I'm not talking about a self-generated emergency. If you do not choose to afford this savings, then get additional sources of income so you can.

2. Identify your basic needs - the essentials in life. Focus on meeting those needs first and foremost.

3. Stop paying attention to what others have and what others want you to buy. Sure, there are things that are very appealing, but the suffering of debt just isn't worth any of that stuff.

4. If you want to live "larger and louder" then start earning more money so you can do so comfortably. Remember, the objective is to live within your means. You might need to learn how to make more money at work.

5. Anytime you start having trouble with making ends meet, just take a look in the mirror to identify the individual responsible for that. It's the same person who can get you out of that situation. Stop blaming others. They are not to blame. They never have been and they never will be.

6. Play the cards you're dealt. Sometimes you get a raw deal in life. It happens. Even a bad hand can be played well by a good card player. And, a few bad hands doesn't mean you lose the game. Skill and determination has much to do with how well you play the game.

To live within your means is simply a responsible thing to do. Learn to live in a responsible manner, or expect to suffer. It doesn't get anymore complicated than that.

Done with Live Within Your Means, back to Mindset of Frugality