Alas, "living within your means" is just a giant personal finance cliché at
this point. People have lost track of what it signifies. LWYM has come to mean
that you're fine if you spend every dime you make.
If you have to use plastic to cover a few gaps here and there -- your vacation, the holidays, some groceries -- that still counts as "living within your means" because you eventually pay it all back. Probably.
So let's rename "living within your means" for the modern era. We'll call it "real-income living." It means, obviously, making the hard choices necessary to live and save on what you earn.
So it's really about spending a small portion of your income to live,
and saving a large chunk of it -- for emergencies big and small, for the
unexpected and for a warm, cozy, secure and happy future.
Saturday, November 08, 2008
Cash based living
As uncertain as things appear in our national and even world economy, one blessing of the current situation is people are talking about and learning about living without debt - and it is becoming popular vs odd. Thanks to listening to Dave Ramsey for several years now, we've been debt free except the mortgage for a while now, and if that hadn't happened, I wouldn't have been able to spend two years not working, and we'd probably be in even more debt now. I came across a fantastic article that really explains that skewed thinking our society has towards wealth and debt, and also talks about truly living within your means (ie BENEATH your means). It really inspired me to take another look at our budget. Since returning to work and going from penny pinching one income to our current state, I've become pretty lax with the cash, and it is time to change that. This part of the article reminded me that our "means" isn't spending most or all of what we make, it is saving as much as possible: