Live within Your Means (Otherwise Entitled, Stop Using Credit)

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A few weeks ago I offered up an exhortation for you to get out of debt. It’s something I’m pretty passionate about and something that is probably pretty weird to some people. Some folks make the conscious decision to use credit and carry debt and believe they have  good reasons to do so.

But, I would hazard a guess that most people think that they should pay off their debts (or at least get their finances in better order), but they aren’t motivated enough or don’t know where to start. It’s not easy, that’s for sure.

Folks who have the motivation don’t always have the earning power. Folks who have the cash often don’t want to change their ways to live within their means and save up for the future. But both can do it.

I have a good friend who once had a ginormous house and the income to match it. We lived near each other back when our family was struggling to get out of debt. Somewhere in our talks way back then, she realized that they could live differently. A few weeks ago we were talking on the phone and my friend reported the changes they have wrought over the last six years. They sold their big honking house, beautiful though it was, trimmed their expenses, built up an emergency fund, retirement, and other assets, and have bought a fixer-upper. They have so much more freedom today and are so happy not to be spending everything they make on things they don’t really need. They’re on solid ground.

While we don’t all have the same incomes, we all have to make sacrifices to pull it off.

Last week I posted 7 steps to a better budget. These are the steps we took years ago to pay off our debts, build up a cushion, and be more responsible with our money. It’s not that we were irresponsible: we looked for deals and tried to stretch our funds, but we lived beyond our means. And frankly, I think that’s dumb.

I’m not saying you can’t buy lovely things, go nice places, or do fun things. I’m saying make sure you can afford them, as in, pay for them outright. If you can’t afford them, then find a way to make more money or go without. It’s really quite simple.

Live within Your Means (Otherwise Entitled, Stop Using Credit)

It’s also quite difficult. And humbling. It means that you might:

  • not use the air conditioner in the heat of summer
  • avoid using the furnace in the cold of winter
  • eat beans and rice instead of steak and potatoes
  • make more food from scratch instead of buying what you want when you want it
  • wear clothes until they are far past their prime
  • drive old, possibly clunky cars
  • abstain from vacations
  • not go out to eat
  • clip coupons and use a calculator when you shop
  • not sign your kids up for dance lessons or let them go on that big trip with so-and-so

I’ve done all these things and more to make ends meet. Note: this doesn’t make me a better person. This isn’t a judgement of character in any way. It’s a way to live so that you know you’re beholding to no one. It’s doing things the old fashioned way; it’s being weird.

But, honestly, it feels much better than running the plastic through the machine and wondering how much to pay toward the credit card bill each month.

As I mentioned the other day, I loosened up my frugal habits once we got to the part where we start funding our retirement. Boring. It was much more motivating to save for a trip to France which we’ve done. (Insert: yay! It’s funded!)

But, I regret now that I didn’t stay the course a little more closely now that we find ourselves dealing with the veritable Money Pit. We have the money to deal with itbecause we worked hard in the past, but I would rather have a bigger cushion to deal with it.

You never know what can happen in your life. Having a nest egg and keeping your financial obligations low gives you freedom.

Live within Your Means (Otherwise Entitled, Stop Using Credit)

photo source: DPlanet


Living within your means, while perhaps unfashionable, is a good way to live.

One big way to do this is to stop using credit cards. That was what did it for us. We would charge everything and then pay it off at the end of the month. Essentially, we would then be a month behind if you count the grace period. It was never truly “paid off” because we were paying off last months expenses while this month’s expenses were accruing.

Stop using the credit card.

In 2007 we hit a road block. My husband who worked in construction was without work for six weeks. We had money to pay off the credit card or money to eat and pay the bills, but we couldn’t do both. We had to make the hard decision to carry that debt and live off what we had. By the time the next month came around, we had earned more income and were able to enact a plan not only to pay off the debts, but also to build up some assets. In the end we were able to afford more things than we ever could have if we’d kept using credit.

There’s a psychology behind credit cards. They make you spend more without your realizing you’re doing it. Even a debit card is not the same as paying cold hard cash.

If you’re series about wanting to cut the chains that debt has around you, check out these steps toward living without a credit card. The comments on that post are rife with interesting discussions, even four years later.

So, how do you (or don’t you) live within your means?

This is Frugal Friday. In an effort to make these weekly financial discussions more interactive, I’m no longer posting a link-up. Feel free to leave a link in the comments. But better yet, chat with us on today’s topic.

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  1. Congratulations… you’ve done a great job. To have 6 children and no debt is really amazing. Plus your fully funded trip!!! I’m in awe… Thank you for your posts. I really love reading how others can do it.. 🙂 Congrats again to you and your family!

  2. How fun. I love to read how others do things. We live abroad so our life is very different. For me, it’s not about choosing to not buy things so much as it is such a pain in the neck to go shopping that the only thing I ever buy is food. I do buy some clothes for myself periodically and I go shopping for my children twice a year when the weather changes. That’s it. We don’t buy anything else. It’s amazing that when you just stick with the basics you save a ton of money…not that we ever have a ton because our residual always goes into airplane tickets every two years but hey, at least we have the money for them when we need them.

      1. China. 🙂 And the shopping situation is enough to discourage any sane person from overspending, especially when you have children with you. 🙂 I hate bargaining and it’s just so exhausting….I miss American shopping. 🙂

  3. I spend less money when I use cash. Two questions I am learning to ask myself in order to spend less are, “Can I make do without this item?” and “Is there a less expensive option?” Making an allocated spending plan for every paycheck helps tremendously, as does setting aside money every paycheck for the bigger hits, like Christmas, vacation, homeschooling and HOA dues. Typing this out, I am wondering if we should budget all year for Little League season. I keep track of this irregular spending with an excel spreadsheet, and everything else (including cash spending) in Quicken. I just keep receipts in my wallet and every couple of days enter the information.

  4. One way we live within our means is to buy 95% of our kid’s clothes second hand. I am an avid thrift store shopping, happy to take hand-me-downs kind of mom. My parents buy them a few new things here and there for the kids but we’ve always done mostly second hand. When they’re little 1) they don’t care and 2) they grow so fast the clothes still have A LOT of life left in them when they’re sent to the thrift store. My oldest just turned 7 so I’m having a hard time finding shirts for him now. We pass his clothes right on to his brothers when he’s done so I’ve started to invest in some quality shirts so that they can survive long enough for all of them to wear.

  5. I am a little fanatical about living within our means after several fails at getting out of debt.

    Once we finally got it paid off with a budget that WORKED for us I have never looked back – we paid off student loans, credit cards and car loans. I have not taken out a loan for a car in over ten years, though we have purchased cars. My husband has now begun leasing but through a business – and it’s unusually necessary for him to have a car to impress [very wealthy clients often DO judge their ‘professionals’ in such a way right or wrong] so while it’s not my favorite part of our lives I don’t ever see the bills so I shut up LOL. Our methods were a combination of mary hunt [who taught me how to make my irregular budget work] and dave ramsey.

    We use a zero based budget – and everything is on it from vacation saving to medical bills, with arrangements to adapt to irrgeular payments and ways to handle extra income that don’t result in it disappearing.

    We do use credit cards. But they are paid off in full every month. And more importantly, the purchases are written down in the budget each day, so in fact that money is ‘spent’ and it does NOT result in our overspending. We’ve experimented with using cash only and, unlike so many people, it worked the opposite way for us – we overspent, we forgot to write things down, we lost track of EVERYTHING! So this works for us – I have not had to carry a balance on any of those cards since we paid them all off except for one time we had a medical expense we hadn’t expected – and it was paid off within the second billing cycle. So it works for us AND we stay within our means.

    I will be honest. The biggest mistake I see other folks making in regard to living within their means is the same mistake I see parents making in rearing their children in general. No one seems to want to say ‘No’ anymore! I always LOOK for opportunities to say NO! I’m sorry, we can’t afford that or, NO, that’s not how I’m going to choose to spend my money today. And I explain why. And I hear kids say things to me like, Mom, if you ever see a good enough sale on x would you buy some? or Mom, I want x, are there any jobs you need done so I can make money?

    My son often swings on a pendulum and asks, ‘are we poor?’ when I say no . . . and for a long time that was a real tug for me to say yes to reassure him. Now I see that I was right to stand fast – he does worry, because he worries from time to time about everything – but I reassure him that we’re not, we are fortunate enough to have a gracious plenty for our needs, and still have enough for MANY of our wants – just not all of them. I wish I could teach some of my peers this lesson as easily!

    1. We too have found that we spend more (and lose track of things) when we use cash. We do much better when we use our credit card (and have never carried a balance). We always subtract the amount we spend with our card from our spreadsheet and it’s considered spent.

      1. LOL Steph you explained it so much better than I did! That’s exactly what we do – but it makes it so much easier to not miss things when I can sit down after forgetting and just look at the cc

        1. And furthermore, I am able to go back and write down what my husband has done – should he tell me? Of course. But the man works 14+ hour days most of the time, and is BUSY every minute of it – he does mention unusual things [had to buy a charging cord, needed a new tire etc] but other things he forgets – this way I go through the cc every week or two and can jot down what he’s spent

  6. I’m guessing you are a Dave Ramsey follower. Nice nod to “beans and rice”, He has helped so many with this life philosophy. Highly recommend his books. I listen to him on the radio daily. Baby steps !

    1. I wouldn’t say that I’m a “follower” whole hog. There are things we differ on, but his Total Money Makeover really helped us get a leg up.

  7. I think it’s great that you have six kids, live within your means, and also are taking everyone to France. You are living proof that it can be done!

    Something that’s always bothered me is when people think I must have some kind of trust fund if I go to France every year, when that’s not the case at all. We all make decisions about where we want to spend our money. I drive a 2003 Honda Civic, live in a 2-bedroom condo, and usually eat at home (rather than eating out). I buy few clothes (but the ones I buy are ones I love–I’d rather spend a lot on a few choice items than buy a lot of so-so things).

    I also am with you: It’s not a judgement thing. If someone would rather have a better car and a larger house and not go abroad, that’s a great choice, too. As long as you don’t beat yourself up for not “having it all.”

    Thanks for a thoughtful post!

    1. I am so glad to hear your story. I confess I made assumptions, too, about how you pulled it off. It’s about choices and priorities and not having it all.

    2. Chez Bonne Femme — like you, my family values travel over material items. We have always lived below our means and made saving a priority. Most clothes are bought thrift, we do not often eat out, and we keep monthly expenses down (one year our a/c died in July, we waited until the following spring to replace it to keep the $$ in our account — we live in St Louis!). Never have we had a six figure income but I have been a SAHM and we have ALWAYS made frugal choices. We’ve been living like this for over 20 years and have accrued a nest egg that now produces income and allows us to travel with our family (we took our family of 5 to Rome last year, and Paris this year). This type of expensive travel would not have been possible without MANY years of making choices (choosing to live in a less expensive home, AND paying it off early, choosing FREE family fun) that align with our priority of saving for the future. I love my way of life and I believe I’m teaching my kids valuable skills along the way.

      1. I love it that you have a nest egg for travel! That’s a great goal for everyone who loves to travel, and it’s possible to get there.

        I think of my parents, and their parents–the credo was quite simple: If you didn’t have the money to do it/buy it, you didn’t do it/buy it. Life was never lived on credit (except mortgages, of course). I’ve done without so many things, and can’t say I’ve missed them one bit, especially when I think of some great memories we’ve created. Sounds like you’re doing the same. Cheers.