OK, OK, everyone uses LBYM in their Posts --- But what does that mean!

[chinaco]

Many of us the term LBYM in our posts. But I suspect that means something a little different for all of us. To me it simply means that we tend to not spend over our income resources. We think about our purchases. We save a large % of our income. But we do not deprive ourselves. We have an upper middle class lifestyle.

For example: We have a nice house and furnishings. We buy new cars, but drive them for 10-12 years (I no longer do maintenance on them). We take 2 or 3 nice vacations a year. We eat at fine restaurants on occasions. We do that and manage to only spend about 40% of our gross income (that includes the mortgage).

I forgot to mention... We still work. Planning to ER in about 4.x years.

I guess technically we LBYM. But we are not neccesarily expense hawks. Maybe when we ER we will begin to take more notice.

What do you mean by LBYM?

 

[NinjaPigeon]

If I did all the things you do, I'd be hitting pretty close to my means So at this stage of my career, LBYM means some depriving is going on. But I don't believe that will always be the case.

 

[tryan]

I suppose anyone who saves ANY $$ is LBYM .. but amoung this group you need to save a high(er) percentage to claim LBYM. It's not enough to max out your 401k, for example.

We saved 25% of our income ... it helped. But it's not what got me to FIRE.

 

[W2R]

Before spending any money, I think of how much my retirement might be delayed and go from there.

I have a nice ~1600 square foot house in a good area close to work. It previously belonged to a woman who died in a car crash, and her heirs were happy to sell me most of the furniture in it for next to nothing. House and furniture are completely paid off.

I have a 2000 Camry Solara with 33,000 miles on it, and I like it, so why buy another car? It is paid off, as well.

My few vacations in recent years have been focused on checking out potential retirement locations, by car, with my dear friend Frank who does the driving (so the cost for me has been minimal since he won't let me pay for much).

I don't pay for much else outside the necessities. There's the gym, but my work pays for half of that. Then there's my love of art - - but for now I focus on cheap art, things that I find at antique/used shops, yard sales, and such, and I spend less than $500/year on it. My fun is mainly in the search for just the right piece of art, rather than the actual purchase.

I max out my 401K and Roth IRA, plus catch-ups, and also save more than both combined for my taxable nestegg. I don't spend much on clothing, and I get my hair cut at Supercuts for $11.95. As for color, I prefer to go au naturel. Others at my same salary at work have told me that they spend $150/month or so just on their clip'n'dips, so I save >$1650/year there.

938 days more before I qualify to retire, and (as you might guess), I "Want 2 Retire"!! So I am hoping to be ready for it by that time. Part of being ready for it is becoming accustomed to a lower standard of living than my salary might imply.

To me, LBYM means maxing out retirement accounts and still making significant progress in paying off debt and/or accumulating a nestegg outside of retirement accounts.

 

[kat]

I pretty much do everything I want to do, but that's always been well within what I can afford.

I've always considered myself fortunate that my favorite things to do are free except for the gear: hiking, snowshoeing, cross country skiing, cycling, barbecues with friends. And my interest in going overseas always seems to be renewed every three years, not every year.

I also have no remodeling bug to satisfy. 1940's stove works, so it's still here. I also enjoy learning how to fix things myself.

 

[Cattusbabe]

To me LYBM means just what it says. It also means peace of mind and control over our lives. We have learned to ignore all the hype that the media and friends and family throw at you, telling you you have to have this or that. We've made our life style suit us and not try to keep up with the Jones. We have also learned that some of the old tried and true stuff, the stuff my parents generation lived by, still applies. Make due, use it up, wear it out. Why we boomers forgot that I do not know but when I look back I can honestly say I did not have a bad childhood and did not feel deprived. Neither did my husband. We had what we needed and our parents were able to retire comfortably.

I do not see LYBM as being deprived. There are may ways of doing the things you want and getting the things you need and saving money. It's kind of fun investigation those options.

 

[Fireup2020]

LBYM...I live with two housemates - so rent is really cheap! (especially since NJ is so expensive) I buy my annual Entertainment book - and use the heck out of those coupons! Like another poster mentioned, I have gear...for so many not so expensive activities that I consider fun (camping, kayaking, skiing, mountain biking, skating, softball, volleyball) After I paid off my car, I purchased some decent quality stuff (not the high end, but good) I have $$$ go into a special savings account for vacations, max out TSP contributions, contribute 20% (working on getting that higher) to deferred comp, and putting in my time to meet pension requirements (military and civil service)...in six months, should have some investment property income to really get some $$$ saved/invested that I will have access to prior to drawing my TSP/IRA $$$. Also, no time or money for hair or nail maintenance. Nail salons get my business when something special is going on. I shop at thrift stores or clearance racks. Kitchen accessories (my other weakness) are only put on lay-away (if possible) I also plead for military discounts wherever I go. It really works! I limit my purchases overall, and try to get the best deal for whatever I plan on buying anyway.

 

[OKLibrarian]

I agree with the above posters--LBYM means living below one's means. The further below the better, but anything is a good start (and better than most Americans manage, unfortunately...). I don't know that we can compete with some of the truly frugal folks on this board, but we live on about half our take-home (I think that worked out to a little over a third of our gross when we did taxes) and save the rest. not to say we deprive ourselves--that third of our gross includes such frugalities as organic groceries, annual vacations, gym membership and being biweekly fixtures at the local sushi bar. we could probably slash another 5-600 or so of of our monthly budget if we chose to, but we chose not to. As DH reminds me when I go over the top and suggest that we could live on rice and beans for a few weeks and sock an extra few hundred into the house fund, the "L" in LBYM stands for Living. I like how it was described in YMOYL--be mindful about the things that bring you joy in your life and focus your resources there, instead of buying unwanted "luxuries".

 

[Meadbh]

My spending habits are like those of the OP. I buy good quality goods that last, but feel no need to have the latest models. I have no "money pit" toys (e.g. boats) and my hobbies don't cost much. I spend a reasonable amount on clothes and grooming, but less than I used to before I started to focus on FIRE! I don't feel deprived.

 

[Dudester]

Has anyone ever noticed that LBYM is also the acronym for "Living Beyond One's Means?"

 

[Olav23]

I think that it is both living below your means, as well as understanding that your deprivation now means freedom later. Also, it gives you a goal in-the-now for life balance, in that if you can't live below your means, you had better find more money *somehow*.

That is what it means to me anyway. I think one of the poster's here's sigs is the best explanation of the struggle (and gives me a kick everytime I see it):

My problem lies in reconciling my gross habits with my net income.
-Errol Flynn

 

[modhatter]

There is no defined % of non-spending of your income. It could mean spending 40% less than you earn or it could mean spending 5% less than you earn. Spending anything less than what you earn on a regular bases qualifies as LBYM.
Naturally it is easier for folks with larger incomes to save a larger %, then people with modest incomes.

I think "balance" is an important word here. I don't necessarily endorse a life of complete frugallity in order to have a comfortable retirement. you might not even make it there.

 

[donheff]

You have seen the Dickens quote here before: "Annual income, twenty pounds; annual expenditure, nineteen pounds; result, happiness. Annual income, twenty pounds; annual expenditure, twenty-one pounds; result, misery." Most of us up the saving rate far beyond Dickens' recommendation but the principle is the same.

 

[Moemg]

Most of my life I've lived below my means. I just never was interested in fancy cars or eating out at overpriced restaurants. My big indulgence is travel and my family .I enjoy treating my mother and my daughter to some nice extras and I'm a sucker for JJill clothes.

 

[youbet]

LBYM is a relative term, a function of your income, life situation and spending needs and desires. There is no specific percentage of income saved that qualifies you as "LBYM."

LBYM is a mindset. Save and invest something today towards building assets to allow you to live without an outside income tomorrow.

It's easy to picture high income folks living below their means. A DINK couple with high paying professional careers doesn't have to sacrifice much to LBYM. As our economy changes from employer provided defined benefit pensions to retirements based on employee funded retirement plans and personal investments, the necessity for less financially privilaged folks to LBYM and save increases.

If enough people can't or won't LBYM to facilitate saving, I forecast a society which becomes unpleasant even for those who have accumulated huge piles of assets.

 

[audreyh1]

I think living below your means is simply that. Spending a little less that you earn, and setting aside the bit not spent for a rainy day. This means little more than not going into debt to support your lifestyle (mortgages excepted).

Now most folks here are doing WAY more than that. They are trying to gain financial independence, and that requires a LOT MORE than LBYM. You have to live significantly below your means so that you can accumulate enough assets to reach financial independence.

If you earn enough money and/or come into a financial windfall, achieving FI doesn't require too much sacrifice. However, to put enough aside for FI on a modest salary can require some significant near term sacrifices in lifestyle.

Audrey

 

[Goonie]

....To me it simply means that we tend to not spend over our income resources. We think about our purchases. We save a large % of our income. But we do not deprive ourselves. We have an upper middle class lifestyle.

For example: We have a nice house and furnishings. We buy new cars, but drive them for 10-12 years (I no longer do maintenance on them). We take 2 or 3 nice vacations a year. We eat at fine restaurants on occasions. We do that and manage to only spend about 40% of our gross income (that includes the mortgage).

Same here. Nice house and furnishings, 'lightly used' "new" car (current year in the year I buy it, but I let someone else foot the bill for the major depreciation), and I drive it until just before the wheels fall off. I also do 2 or 3 nice vacations each year, along with lots of short trips or day trips! I do it on about 25 to 30% (roughly) of my gross income. (no mortgage)

To me LYBM means just what it says. It also means peace of mind and control over our lives. We have learned to ignore all the hype that the media and friends and family throw at you, telling you you have to have this or that. We've made our life style suit us and not try to keep up with the Jones. We have also learned that some of the old tried and true stuff, the stuff my parents generation lived by, still applies. Make due, use it up, wear it out. Why we boomers forgot that I do not know but when I look back I can honestly say I did not have a bad childhood and did not feel deprived. Neither did my husband. We had what we needed and our parents were able to retire comfortably.

I do not see LYBM as being deprived. There are may ways of doing the things you want and getting the things you need and saving money. It's kind of fun investigation those options.

Same here...my parents were quite cheap rather frugal, and saved for their retirement, but we never did without what was needed. And even though we didn't have the latest/greatest stuff when I was growing up, it didn't have any ill affects on me. Heck, most all of my friends were in the same boat, so we didn't know that we were missing out on anything!

I quess my folks taught me well, 'cause I followed in their footsteps, and have been able to ER quite comfortably! I don't foresee much change taking place in my spending after ER from what it was before ER. My net income will be about 16-17% less than while w*rking, but that won't affect my current lifestyle, since I currently have only been spending about 25-30% of my income.

 

[tryan]

folks here are doing WAY more than that. They are trying to gain financial independence, and that requires a LOT MORE than LBYM. You have to live significantly below your means so that you can accumulate enough assets to reach financial independence.

For us "not spending" was alot less important than getting the wad to grow. Just need to be careful NOT to let spending grow as the wad grows.