You will often hear us preach that the first step to investing is to get out of debt. And the first step to getting out of debt is to live BELOW your means! How do you Fools do it?

Share your ideas and methods, be it brown bagging or foregoing that third vacation home in Aruba!

Share your ideas and methods, be it brown bagging or foregoing that third vacation home in Aruba!

Say it ain't so, Twitty! Say it ain't so! Anything but that!!

Okay, okay. I'll bite. So what does it actually mean to live below your means. Is it frugality? Is it being cheap? Is it doing without the things you really want? Is it the ultimate in sacrifice?

I had an aunt who never had money problems. But one thing that she did was to wash the Reynolds Wrap. Yep! You heard me, she reused aluminum foil. Again and Again.

(Curses! Foiled again!)

But come to think of it....

Why not?

Tony
...but I still am...

Off2Aruba

Thank you. This is now on my favorites list.

Thanks for adding this board! The foil washing story reminded me of people I used to know who kept a big pile of small white towels in the kitchen to use instead of paper towels. Like the size of a dish towel, white terry. White ones can be bleached to bring back to perfectly clean. They used them for anything you would use a papertowel for except not throwing them out...washing instead.(Separate piles for food preparation towels and cleaning towels) You could even get huge bath sheet-towels at an outlet and cut them up and edge the sides. I like not wasting so much paper...I'm not sure if it saves money with all the washing towels, but I may try it. meowiz

My mother washes out plastic baggies (especially the zip-lock kind, but even the sandwich bag kind), and puts them over the sink faucet to dry. It could be really annoying when you weren't paying attention and tried to use the sink. Water would spray EVERYWHERE! I'm frugal, but I've drawn the line on saving plastic baggies! (But I sure am glad she taught me about clipping coupons and comparison grocery shopping. It saves me at least 20% on my food bill each month.)

Glad to see this board here...Great idea Fools!

Pam

I wash out plastic baggies!! Not necessarily to save money, but to save the environment. My husband finds this to be a MOST annoying habit ...
I was thrilled to run across this board this morning. I am feeling rich because I have given myself the summer off - to be a mom and housewife. Three months. I even wrote "HOUSEWIFE" on an application on the employment line! With pride!

Chopsticks standing in a dish drainer are a good way to dry the baggies. I usually buy ziplocks because they last through many washings. Once you can afford not to do this, it's almost impossible to break the habit;)

I put two cup hooks at either end of my upper kitchen cabinets and string one of those temporary clothes lines with attached clips ... lets me hang a few more baggies at a washing ... you're right, RecoveringFool, it's an impossible habit to break!

I'm neither chinese nor japanese but I use chopsticks most of the time. Saves time and water washing dishes.

Now, if only my wife can learn the skill.. :-(

But you kill so many trees in the process.J/K :-)

I'm here to learn how to live below my means!

My mother washes out plastic baggies

my wife does that, too. I thought it was kind of strange at first, but then I saw that we didn't need to buy nearly as many baggies, and I like the savings.

I wash out plastic baggies!! Not necessarily to save money, but to save the environment

right on. that's a good reason, too.

Okay, I admit--there is no purpose to this post, except I can now I say I participated in the first thread on the LBYM board. :-p

Thanks!
Joe

slow night???

s'wing - had coffee way too late tonight

You will often hear us preach that the first step to investing is to get out of debt. And the first step to getting out of debt is to live BELOW your means! How do you Fools do it?

Share your ideas and methods, be it brown bagging or foregoing that third vacation home in Aruba!

I know I'm jumping into this conversation a little bit late, but I usually do it while talking on my cell phone while driving my H2 to my sailboat, which is docked at the lake where I have an overpriced cabin. What do I do? I don't eat shrimp cocktail while driving anymore. The money I save puts me in the black.

Spy

And the first step to getting out of debt is to live BELOW your means! How do you Fools do it?

I didn't realize there was a board for this. Could someone point me toward some relevant posts on the subject?

Look at your habits first.. Is it a habit that you go out to restuarants ? Smoke ? Drink ? Buy a new car every 3 years ? Buy expensive gifts ? Travel to exotic places every year for vacation ? Then my friend if you will please cut back on any of your habits,, take the money you have saved and become a fool !!!!! It will probably be fun for you to watch your money grow versus watch it fly away !!

Simple a BUDGET is the first step. Write down all your money you are going to make for the month and spend it on paper. Then do some long term forecasting e.g. a year. You will be amazed at how much you spend on different items. I sat down with multiply couples and individuals and found the biggest item or problem is no plan with there money. Most of them cannot believe what they spend in restaurants or on fast food. To start I tell most people to carry a small pocket colander for about one month and write every penny you spend down in it. Most are shocked at what they spend. As far as the washing zip lock bag, how about just buying plastic containers, The washable napkins is something I recommend to people, but a funny story on that actually know a couple who did that but when their parents can to dinner they did not use the cloth napkins because they felt weird. One other point buys your gift cards online at a discount. I could go on and on, because I actually teach this stuff. Anyways once you do a long term budget and change your money spending habits, the living frugal will come easy and you won’t even feel it.

pocket colander

Still trying to visualize one.

1. **Got rid of my debt

2. Find the best deals on cellphone service (Cut my bill down from $100/mo to $43/mo)

3. Stopped taking cabs.

4. Walk home from work each day (3 miles, good if you live in a walkable area only)

5. Eating more fruits and vegetables, as expensive as they may seem, has cut down my food bill.

6. I only buy coffee when on the road -- otherwise I make it at home or get it free at work.

7. Huge help -- I got a roommate to cut down on the overpriced cost of renting in NYC (cheaper than moving when factoring in commuting/moving costs).

8. Stopped eating at restaurants as a form of socializing. I now eat out only very occasionally.

9. Bring my lunch to work.

10. Stopped smoking!

One trick I've been using- Every day save your change from every transaction. Never pay with exact change. (If somethings $8.01,pay with dollars then get your .99 and throw it into the jar.

It's pay'in for Christmas this year.

Ha! I like this thread.
One thing about budgets: I've always had such a hard time with them, but I guess my problem is not what you would expect. Every time I sit down to put together one, I end up stressed out and discouraged because according to every single one of my budgets we end up deep in the red every month.
In reality, however, I have been able to save pretty much every month with a rare exception; over the last 12 years (only six of which I've been out of school, by the way) my personal net worth has definitely increased, so I know I'm not just imagining things. I also am trying to do a good job on a budget - estimating things to the best of my ability etc., but always end up with the same result.
Well, I finally swore off doing budgets, and we have been just trying to be judicious with our expenses... Works so far!

Simply,

I have a similar experience with budgets. I use(d) a budget to plan for the future (now and next year) but not for today or tomorrow. Sounds silly but ...

Any budget is strictly a plan. When I was in the Marines earning $80 a month, I had a detailed budget for every penny I made that left $2/mon for entertainment and eating out. It was at times frustrating but I was able to save a little.

After a while, I knew my spending needs/habits and the budget was less important for daily/monthly purposes.

When I went overseas, I used a budget/spending plan to buy the things that were advantagious to buy overseas. I knew what I could afford and when I could buy it.

In planning for retirement, I did a lot of work to derive a resonable budget 15 years ahead of time. I continually revised that as the years went on.

Now we are 5 years into retirement and I still use the plan and tweek it as changes occur.

It isn't a daily or even weekly thing, more like quarterly.

Since we live off savings, I track how much savings are going up on an annual basis to insure we are funded for the future.

Gene
http://www.taylortel.net/~gdett2/

Hi Shirtmeister,

Just curious, we go out to restaurants with friends frequently to socialize, did you find a substitute social activity in place of this, or ??

I agree with the BUDGET concept 100%. However, I'm looking for budget guidelines in terms of percentages for my son as he is just starting out. I’d like to address this in terms of building the very first budget. He is in college living off campus and knows everything - almost. His mind requires that a budget be defined in terms of Rent XX%, Utilities YY%,

Your recommendation to write down all you spend, and look for areas to reduce is okay for established couples looking for areas to FIND money they’ve been spending, and then redirect it to savings or paying off bills, or whatever is required. But what if you don’t have a history? How does one put together an initial budget? I gave my son some guidance based upon a typical mortgage company might like to see 25% of monthly income toward the PTI, and 33% maximum for all monthly payments (CC, Student Loans etc.).

Anyone here ever run across a list of basic guidelines to create their very first budget? The kid likes to play with numbers; so if you have any to share please post them.

ADV –thanks – ANCE

Living below your means is a definition for the word "SACRIFICE".
Giving up some of the things that bring us immediate gratification for the rewards we will receive in the long run, when looking back isn't all that long.

Your recommendation to write down all you spend, and look for areas to reduce is okay for established couples looking for areas to FIND money they’ve been spending, and then redirect it to savings or paying off bills, or whatever is required. But what if you don’t have a history? How does one put together an initial budget? I gave my son some guidance based upon a typical mortgage company might like to see 25% of monthly income toward the PTI, and 33% maximum for all monthly payments (CC, Student Loans etc.).

Care needs to be taken with recommended percentages for budgeting. The recommendations give high percentages for servicing current debt. The recommendations also are for those who are working.

If you don't have a history, then estimating expenses for the first year and keeping good records is the simplest alternative.

Don't buy what you cannot afford

edfariscal,

Welcome to the Motley Fool!

Thanks for sharing at Living Below Your Means! If you're starting with post #1, you have a LOT of reading ahead of you!!!

I hope you enjoy your time at the Fool and that you keep jumping in!

Fool on!
TMFHunzi

Call me skeptical, but with a photo of Bill Gates on his/her profile, one stock pick of Apple, and a very first post here, in such a simplistic, curt style without a simple hello or intro of self to the board, my doppel-radar is pinging.

Just sayin'

Laura

don't strain yourself. just pour it through a shirt pocket.

Chop sticks are re-usable - no washing ;-) A once over with a soapy sponge or dish towel and a good rinse.

Chop sticks are re-usable - no washing ;-) A once over with a soapy sponge or dish towel and a good rinse.

Seriously?

Far as I recall, "once over with a soapy sponge or dish towel and a good rinse" is called "washing".

briangw's very first post on TMF was:

Chop sticks are re-usable - no washing ;-) A once over with a soapy sponge or dish towel and a good rinse.

22 minutes later came this reply, undoubtedly making the new person feel warm and toasty inside, convinced he'd found a possible home board:

Seriously? Far as I recall, "once over with a soapy sponge or dish towel and a good rinse" is called "washing".

...hardly an appropriate snarky pushback for someone's first post. Don't you think an inward smile at a humorous mental lapse would have been better? Nice LBYM PR......jeesh...

Generally, anything that is good for the environment like cutting down fewer trees to make less paper products, also saves you money. So why not kill two birds with a stone?

cabezax100 writes: Generally, anything that is good for the environment like cutting down fewer trees to make less paper products, also saves you money. So why not kill two birds with a stone?

Right. But is killing birds with stones really all that good for the environment? Although, I suppose hurling turtles at birds...or jabbing them with crochet hooks...would be worse.

Just havin' some fun :P

Making Trax

Generally, anything that is good for the environment like cutting down fewer trees to make less paper products, also saves you money. So why not kill two birds with a stone?

Er... trees are a renewable resource that are constantly being cut down and replanted on tree farms just like wheat but on a longer time scale.

And what have you got against birds?

Desert (hope you're not against Christmas trees too) Dave

Frankly, I have never found budgets all that helpful. What works better for me is to decide what your priorities are. Ask yourself these questions:

1. What product or service really contributes to my quality of life?

2. What product or service would be neat but will not really make my life better?

Of course a lot depends on how you answer these questions. To be effective you need to limit and focus your idea about what the good life is. But here's how it works. My wife and I think that travel is definitely a part of #1. So we do quite a bit of traveling. BUT, we find that while travel is definitely a part of the good life, staying in a 4 star hotel is NOT. Sure, I would prefer to stay in a luxury hotel but it wouldn't enhance the overall experience enough to warrant the expense. So we stay in the cheapest reasonably clean lodging we can find.

Or...we would say (we have no other choice) that owning a reasonably reliable, comfortable car is a #1. So we have a choice. Do we buy a 3 year old Ford Focus or a new Mercedes C class? Owning a Mercedes C class would be really cool. It would enhance my ego. If someone were going to give me a car that is what I would want them to get me. But owning that Mercedes is not really going to make my life better...ergo, I buy the 3 year old Ford Focus.

So I am not cheap. I spend money on those things that really make for what I think is a good life. But the things that fall under my #2 category, I just forget about them. With that simple decision making rule we are saving thousands of dollars a year.

Generally, anything that is good for the environment like cutting down fewer trees to make less paper products, also saves you money.

Commercial forests are renewable resources. Less paper use eventually will result in not only less trees being cut down, but less forests (trees) because they aren't needed.

While I often suggest one read a few weeks to a few months of posts before posting. . .

I'm not sure going all the way back to 1998 is necessary. . .

Ishtar

Living below your means is easy. Don't buy anything you want. Only buy what you need...and only buy it when you actually have the cash available. Don't buy your way into debt.

Ask yourself these questions:
Do I want this or do I need it?
If I need it, can I wait to buy it at a later time?
Can I cover all my monthly expenses and still have cash left over to save or invest?
Do I have enough cash on hand to cover myself in any emergency?

ehkurtz ~

Sounds like this works for you and this is very good advice. There really is no magic to getting ahead. A lot of folks just don't like to deny self when it comes to the long-term.


Robyn

Have a plan. start by having credit card limits well below your potential for borrowing. decide on a lifestyle that you feel comfortable with and stay within it. for practical purposes who needs a 5000 square ft house once the kids are gone and the dog dies? Also take some tim eto learn the basics of investing so that your savings have a chance at growing . never buy an option once yo do you have lit a fuse. Sell them , sell puts to acquire good quality companies and calls to increase income and ultimately your return

start by having credit card limits well below your potential for borrowing

I don't care what my credit card limits are.

PSU

Wow. This thread was started in 1998.

What a blast from the past!

Andrea

The best way to get out of debt is to never take any debt on... well, that might not be too practical, but the point is, don't take on BAD debt. Also, don't buy things that you don't need.

Where do most people get in trouble?
House, Car, optional accessories.

House: Is buying right for you? A lot of first time home buyers see what their loan will cost but then forget about HOA, taxes, and upkeep. They also forget that some of the things that they may have gotten for free in their rental (e.g., water, pest control) might now be separate. I actually have gone back to renting the house I live in even though I own multiple rentals - the places I invest in have a better rate of return, but the place I live in wouldn't meet my metrics.
BAD DEBT: More house need or than you can afford!

Car: Do you really need that Audi A4 or that Chevy Tahoe? Would a Honda Civic do just as well? If you are only going to use the "truck" part of a truck once or twice a year, you are probably better off renting one for those couple of days instead of buying a vehicle that is too big and driving it all the time. Pricier vehicles often have worst financing options, higher insurance payments, and more maintenance costs.
BAD DEBT: Paying for more car than you need or can afford!

Accessories: Do you need to replace your 42" flat screen that you bought 3 years ago with a new 72" one? Really? Do you need to upgrade all you IKEA furniture to something fancier? Do you really need to go to the Ipad3 when your Ipad2 is just fine. Those purchases start to add up quick.
BAD DEBT: Replacing things that are still in perfect working order!

When it comes to the little stuff like taking lunch to work instead of buying it, or not going to SBUX every morning I like to take a balanced approach. I'll try to avoid those money sinks, but if I'm tired of PB&J sandwiches I'll go out for lunch a time or two/week. Compared to the BIG items above these are minor. The $3500 you save by not buying that TV is more than you'll save by cutting out 230 lunches at $15 a piece.

When it comes to the little stuff like taking lunch to work instead of buying it, or not going to SBUX every morning I like to take a balanced approach. I'll try to avoid those money sinks, but if I'm tired of PB&J sandwiches I'll go out for lunch a time or two/week.

I often took leftovers or a can of soup. It doesn't always have to be sandwiches.

Agreed, the big ticket items are huge blips, but a lot of people let that ten to fifteen dollars a day slip through their fingers without being aware of how much money they're losing.

There used to be a posted on the boards named TamarianG, and she didn't getting out of debt until she started paying attention to the little expenses she had ignored. That's when she started seeing the waste.

Nancy

Just a couple of ideas -

No credit cards, use debit card instead. This way you aren't spending what you don't have.

Make a set savings amount the first thing you take out of each pay check.
It isn't that long before you stop missing it.

Save for big purchases instead of paying for them with credit.

Try not to indulge in sudden buying. I always get in trouble when I buy on a whim.

Good luck to us all - saving is a never ending process.

Karen

Learn the definition between a "want' and a "need".

The necessities of life, words of my college professor: Food, water & Shelter.

Before you purchase anything you should be asking yourself do I want this or do I need this.

You do not need those new pair of snowboarding boots. You do not need to buy the filet mignon at the butcher. You may want to but there is always an alternative. One of which is to not purchase anything at all.

Try mint.com to help track your finances.

No credit cards, use debit card instead. This way you aren't spending what you don't have.

Be very careful about using debit cards. Many banks claim they give the same protection as credit cards, but it is not a legal requirement. When disputing transactions, the cash is gone from your account.

I have stopped using debit cards except as an ATM card. We have started to have our debit cards reissued as ATM only (eliminating visa/mastercard cobranding).

Overdrafts can be very expensive with debit cards.

Listed not in order......switched to compact florescent lights. For lights left on all night...LED.

Installed a solar system, get a small check back at end of year now.

Sold SUV. Now own two hybrids, Prius and a Nissan.

Wood burning stove, collect junk wood. (I have never bought wood)

When we do use the heat it comes on only short bursts...morning and evening..its 35 outside right now and I did use some last night. (hey its xmas...we splurged)

One refrigerator. Energy star.

Seldom use A/C in summer, swamp cooler works great.

I brown bag every day...I forget my lunch I don't eat....my bad!

Pete,

Welcome to the Motley Fool!

You've found a great board in Living Below Your Means. There are over 800,000 posts on this board! Feel free to browse through the older posts or just jump in to the most current threads.

Sounds like you have LBYM well in hand and have great ideas to contribute!

Fool On!
TMFHunzi

Good advice only if you find yourself spending in these categories. For someone who has already been living frugally because or income restrictions - not so easy.