Why I Live Below my Means

[bank5]

It's not always a "sickness" or an "obsession." Sometimes frugality can be a hobby for people.

haha...I like that. Some people love making money and hate spending it. I'm one of them. Probably the biggest LBYM in the world is Warren Buffet. Doesn't he still live in the same house that he bought in 1965. I think he still has the same office too.

 

[bank5]

The fact that you say you think too much about money, means to me that you are not following your own priorities and need to think more about what is important to you. Not to someone else - - but to you.

It has to do more with my upbringing than my priorities. I didn't have a lot growing up and money was often a concern. It's engraved in me to the point where it hurts to spend $0.99 on a can of corn at the grocery store when I know I could buy it for $0.69 at Target

 

[NW-Bound]

That's it!! That's it!! People are always asking me what my hobbies are, and I draw a blank. FINALLY I have identified a hobby of mine.

Frugality, tightwadism, LBYM - - or, Applied Spiritual/Mathematical Principles of Personal Finance, I suppose. Thanks.

I like to look at the spreadsheet of my portfolio in Microsoft Money. I remember seeing it getting the 7-digit for the first time one day in 2000. Nice, nice...

My friends called me Uncle Scrooge when I said I like to count my money at the end of a day when the market had a good run. But they also know that we are the most traveled, taking 3-4 trips a year, while I am driving a 15-yr old car. Heh heh heh... One needs to spend money on what matters to him most.

 

[ProspectiveBum]

I choose the LBYM lifestyle because I found myself in (relatively minor) debt as a young adult, and I hated it. Creditors were calling almost daily, which was bad. Even worse, I found myself avoiding a beloved relative that I owed several thousand dollars to. It was, by far, the most stressful period of my life.

I'm not frugal by nature, so I occasionally have to remind myself of the above to avoid spending money frivolously. Mostly, I'm thankful to have learned that lesson young and fairly cheaply.

 

[Culture]

I've notice a lot of financial advise books tend to spend a lot of time on the "Latte factor", the small expenditures that add up to a lot over time, but often don't address the big expenditures as much.

My experienced has been that most people with high fixed cost also have problems with excessive purchases of Lattes. Not universal, but very common.

 

[Culture]

I personally don't care if people want to live above their means as long as they can deal with the consequences without impacting me. But they rarely can. I am finding that those people who most vocally criticized my LBYM lifestyle a few years ago, are the same people who are now clamoring for a piece of my money.

Amen brother!

 

[mews]

Applied Spiritual/Mathematical Principles of Personal Finance, I suppose. Thanks.

So, when does your book come out??

ta,
mews

 

[FUEGO]

My experienced has been that most people with high fixed cost also have problems with excessive purchases of Lattes. Not universal, but very common.

I think that is due to the thought that "Hey, I never have any extra money, and I never will." What's the point of saving now since I never have any money?

I've always said that the first million is the hardest.

 

[W2R]

So, when does your book come out??

ta,
mews

Hey, I just might write one (for my own personal satisfaction, since I doubt anyone would buy it) after ER. I'd love to get my thoughts on my "hobby" written down. Who knows? Maybe someday my dear daughter would even stop shopping long enough to read it.

 

[ziggy29]

So, when does your book come out??

What's the point of writing a book when your target audience is a bunch of cheapskates who wouldn't buy it?

 

[FUEGO]

Hey, I just might write one (for my own personal satisfaction, since I doubt anyone would buy it) after ER. I'd love to get my thoughts on my "hobby" written down. Who knows? Maybe someday my dear daughter would even stop shopping long enough to read it.

What's the point of writing a book when your target audience is a bunch of cheapskates who wouldn't buy it?

Maybe W2R's daughter would buy it since she is always shopping.

 

[Amethyst]

Wow, great thread; well-written posts.

There was a post called "Selective LBYM" that spoke to our philosophy. We gave up some things so we can have others. We have a very nice home with good quality furnishings, but we also have one small automobile while our neighbors drive Lexuses and BMWs. What's more, we're the only people in our neighborhood who maintain our own yard and clean our own home. (In fact, I'm the only woman I've ever known who does yard work involving any tool larger than a trowel).

On the other side of the coin (so to speak), we believe in buying something that we really, really want, if we can afford it. The key is "really, really want." Buyer's remorse is a very unpleasant emotion that one tries hard to avoid.

Oh, and I remember when the advice for saving money to invest was to "give up that pack-a-day habit." Didn't work for me. Never smoked, and don't care for latte's, either!

 

[FIREd]

Our brand of LBYM is based on the following tenets:

1) keep fixed expenses low. I hate committing to "monthly expenses". Hate it.
2) Always find ways to cut expenses for things that bring little enjoyment to our lives so that we have more money to spend on things that really do matter to us.
3) Resist "trading-up". As our income increases, we don't spend more, we save more. Our annual expenses haven't changed since 2004, yet our income has almost doubled. We liked our life in 2004, we still like our life now and we don't believe that spending more money would make us any happier.

 

[BunsGettingFirm]

I

My car is 12 years old, high mileage, and (I suspect) getting close to the point where upkeep will be more expensive than buying a newer car. However, just the thought of shopping for a car and spending that kind of money (never mind that I have the means) is making me physically ill to my stomach. (The thought of repair bills for the current car also makes me ill.)

While this personality quirk has definitely helped me accumulate more savings that most of my colleagues, it definitely leads to problems as well. Grep mentioned dating which has also been an issue for me; and, not having a reliable car could conceivably impact me financially if I were to miss a client meeting, etc.

Just another perspective.

I think it's important to have a decent looking car that doesn't send the wrong message which my current used minivan is sending a plenty. Thank goodness that decent off lease entry luxury cars with less than 30,000 miles cost less than most brand new economy cars. Buy a nice used Acura TL for $15.5k. It's not a lot of money, and you don't have to worry about looking like a complete dork on a date.

 

[Culture]

On thing that I have not seen mentioned here (I may have missed it) is the reason that my wife and I LBYM, which I touched on the original post. Stress & Lifestyle Freedom.

My wife and I compare ourselves to our friend and acquaintances, and it is clear that we live at a much lower stress level than anyone else that we know. It is clear to us that the primary difference is that we have plenty of money to do what we want to do, and never are worried about the bills at the end if the day. We have never, and I mean not even once in 22 years, has a single argument about money. It is just never an issue.

When I started my own company (in February of last year, yikes!), almost all of my friends indicated that they could not do this because of the financial risk; they needed that guaranteed paycheck to paid the bills. I was not taking a risk, as i did not need to work anyway. It is turned out better than I ever imagined from a financial perspective, but never would ahve happened if I was worried about making the car payment.

These are the primary reasons the I LBYM.

Edit: not to say we do not have disagreement about spending. They just remain friendly disagreements, because quite frankly the decision does not affect our ability to pay the bills.

 

[enfp]

Applied Spiritual/Mathematical Principles of Personal Finance, I suppose. Thanks.

I love this.

 

[enfp]

On thing that I have not seen mentioned here (I may have missed it) is the reason that my wife and I LBYM, which I touched on the original post. Stress & Lifestyle Freedom.

My wife and I compare ourselves to our friend and acquaintances, and it is clear that we live at a much lower stress level than anyone else that we know.

We have much less stress and so much more freedom than most people we know. Family and friends are hurting right now. We are so LBYM more than everyone we know. But the freedom is so worth it. DH sees his kids all the time which he couldn't when he was working He hardly ever saw them. He can fly and help his ill parents which he couldn't if he were working. By dh leaving the workforce at a youngish age (40), we gain so much that is worth more than anything we could buy. If we have to return to work one day, at least we will have had this time together now as a family while the kids are young.

 

[Walt34]

I think it's all about making conscious, rational decisions about what one's priorities are.

I usually bring lunch from home simply because I did the math - lunch from the grocery costs at most $3/day, times four or five days = ~$13.50/week. If I buy lunch from a carry-out or restaurant it's going to be two to four times that much. Over the course of a year that's a couple thousand dollars or more - one can take a fairly decent vacation with that. Over the course of 20-30 years that's some (where I come from) serious cash. So what do I want? Lunch at the restaurant every day or a nice vacation once a year or a really big splurge every five or ten years?

The point is that it's a thought-out decision.

 

[Notmuchlonger]

I think it's all about making conscious, rational decisions about what one's priorities are.

I usually bring lunch from home simply because I did the math - lunch from the grocery costs at most $3/day, times four or five days = ~$13.50/week. If I buy lunch from a carry-out or restaurant it's going to be two to four times that much. Over the course of a year that's a couple thousand dollars or more - one can take a fairly decent vacation with that. Over the course of 20-30 years that's some (where I come from) serious cash. So what do I want? Lunch at the restaurant every day or a nice vacation once a year or a really big splurge every five or ten years?

The point is that it's a thought-out decision.

Similar to how I think things out Walt. When I see thousands of dollars a year I start contemplating what if. Right now my cable internet/tv/phone is almost 2000 a year. Yeah Im doing the what if thing.

 

[se012101]

When my wife and I first really got settled down (house, first kid, etc) about 6 years ago, I'd just moved to the area about a year before, and taken a bit of a paycut to get into my field in this area - I work in a pretty specialized field where there will typically be only 2 or 3 employers per major city (we live near Dallas), except for LA which has many. The money certainly wasn't terrible, but it was a bit tight. In a typical month, we'd be able to save about 400.00 in those days.
In those days, we saved what we could because we saw it as layers of protection between our nice little life and things going wrong. Of course, we still see it that way, but we were very accutely aware of it then because we hadn't set our roots very deep yet.

Anyway, I really carved out a niche for the company I worked for then (and still do), which was also going through some explosive growth. So the raises were fairly spectacular. 15k one year, then 20 the next, then another 10, then a whopping 27.5. The worst year was 7.5 which was last year. The end result was about 125% pay raise over 5 years. During all of this, there was a bit of a sense of "knock on wood, this seems to be working", but each time I got one of those raises, neither of us really felt any need to trade up some aspect of our lives. We liked our life, and didn't see any need to change it with a bigger house more befitting of our income, a really nice car (though I still spray drool over any corvette that I get with 50 feet of!), or any of that. So, despite all of those raises (which have not come without a cost - work responsibility/stress have increased to a point where I don't really enjoy work anymore, which is a real shame because I used to love it), we're still living more or less the same way we were 5 years ago, with maybe just a bit of creep along the way, but not much. That's how we've managed to live below our means and save quite a bit - just working hard, and when the raises come, resisting any temptation to trade up in our expenses. We do treat ourselves, but the golden rule is that we're only allowed to blow lump sums, not add new monthly commitments.

 

[old woman]

I am minute by minute careful with money. I will spend the time shopping to get a great deal or not buy. I leave things in the stores even if I kinda want them. Last week I looked for clothes and didn't find anything I really wanted so only bought 2 sweaters for $3 each and a 5 pack of underwear for $5. I buy mostly loss leaders in the store and am very careful.

But once in a while I got all out and buy a big ticket item. I got a new car now and am so loving the luxury. I have over 600 miles on it now and this morning on the way to work a display lit up telling me the tire pressure in each tire with one of them flashing. On the way home it was 2 PSI less than in the morning so I stopped at the tire store and they found a tiny nail in it. My old truck never told me the tire pressure, I am constantly amazed and the wonderful new features and bring a beverage just so I can use the heated or cooled cup holders. I have had my old truck 12 years and still drive it most days but having a luxury car is just luxurious. My car may not actually be a luxury car but it is to me.

 

[Amethyst]

Oldwoman wrote, My car may not actually be a luxury car but it is to me.

This is very much in tune with our attitude--not about cars, since we have a "car that gets us there and that's it," but buying decisions in general.

We tend to factor in "Will it last?" to our buying decisions, and avoid ephemeral things. Husband has never bought me flowers, since they're dead in a week, but over the years he has bought me a number of wonderful, artisan-made wooden boxes. Who needs more than one fancy box to put things in? Nobody, but these things make me happy every time I look at the details of the intarsia designs, or open the "puzzle" boxes and put them back together again.

(Not that we don't like nice cars. When we sold our house years ago, we looked at the proceeds check and the first thing out of BOTH our mouths was, "That's enough to buy a Ferrari!" I believe the next thing I said was, "Too bad there's not enough room in a Ferrari for a kitchen.")

Re the sense of physical pain that some say they experience when opening their wallets: Medical expenses, and TAXES cause us extreme agony. And then there's repairs! Nothing should ever go wrong with anything! And when it does, it shouldn't cost so blamed much to fix!

 

[Keim]

I LBYM for one reason: Control

I want the control over my destiny that having adequate savings in the bank gives me.

Case in point-last fall I had to quit my job, and I did not have another lined up. Thanks to our LBYM lifestyle, my wife and I knew I could quit, we could survive on the income from her part time job. And, if we did go slightly into the red, we knew we'd have plenty of savings to tide us over until I found work. Thanks to our LBYM values I was able to walk away from a very nasty situation. I never would of been able to do that if we were paying off a mountain of debt.

Savings=CONTROL

 

[ls99]

Wow. This thread is an LBYM book. The ultimate cheapskate could not have written it better, though he has it better organized, I'm sure. I don't read books on being frugal, had my Masters in the field by age 15.

I don't have any special system except I grew up with an extremely tight budget of my mother, father deceased at 19th month of my life. By 13 I was working plus school to pitch in, by 15 majority earner. (no child labor laws in communism)

Early learned the difference between wants and needs, the thrill of a splurge. Nothing much has changed in my attitude since.

For good mental health it is good to blow some money on frivolity at times. Just don't overdo it. Hence my sig. line.

 

[dex]

Savings=CONTROL

Savings=FREEDOM