How to best live below your means? (Advice to the younger generations)

Bamabuzzard · Mar 10, 2014

Dave Ramsey posted a pretty good article on fb yesterday about the lack of retirement savings in a large number of society. Granted there are those who truly cannot set aside for retirement. Their income barely is enough to cover essentials. But that's not who we're addressing here. We're talking about those who have enough income to cover expenses each month but some how find themselves barely scrapping by due to frivolous spending. Yet will tell you "We just don't have the extra money to put into retirement/savings right now."

I'm sure many of you have friends who you can point to and say "Yeah, we know some people like that." We've had some of our friends ask us (over the years) why we don't "treat ourselves more" with vacations, weekend getaways (which we finally did after last month) etc. Our standard response is "If we can't pay cash for it we don't do it." We do not own a credit card, we put X amount of dollars per month into my retirement, her retirement and into an emergency savings account. What's left over after that goes to pay the bills and do some odds and ends entertainment/recreation (like eating out or taking kids to a movie etc) and the rest stays in our bank account. Yes I'm a Dave Ramsey disciple on somethings and one of those things is "If we can't pay cash we don't get it or do it."

So in saying that. If you had an opportunity to give any tips, advice or life money lessons to the younger generations on how to live below their means. What would you tell them?

uafan4life · Mar 10, 2014

You mean besides "Don't be stupid with your money..."?

GreatDanish · Mar 10, 2014

1. Do everything you can to avoid debt in college. Work, get every ounce of scholarship, and spend summers taking a class or two and making money. My wife nor I got full scholarships but both of us finished our Masters with no debt. It can be done.
2. If you get married, live on one income until kids come around. This has been the single best financial decision we have made.
3. Budget. I will go against Dave Ramsey and say that not everyone needs to have a budget, but if you want to reduce the amount you spend, you must. You have to decide what is worth cutting - eating out, clothes, groceries, tv/cable, ... My wife and I basically didn't do anything besides pay bills and buy groceries for about two years.
I could go on...

Bamabuzzard · Mar 10, 2014

uafan4life said:
You mean besides "Don't be stupid with your money..."?

Yeah, you could put it that way. A lot of young people today (or the ones I've worked with) don't think past next weekend. When I mean "young people" I mean married couples who are in their mid to late 20's and on up to mid 30's. A lot of my tax return work turns into financial consulting because I'll ask (if I don't see it) "Are you putting back for retirement?". The standard answer I get is "We don't have the extra money to do that right now." Yet when I look at the total of their W-2's I'm sitting there thinking "How in the hades don't you have enough?".

Tide1986 · Mar 10, 2014

Use a "pay-as-you-go" cell phone: no long-term commitment and usage ($) is limited to what you can afford.

Bamabuzzard · Mar 10, 2014

GreatDanish said:
1. Do everything you can to avoid debt in college. Work, get every ounce of scholarship, and spend summers taking a class or two and making money. My wife nor I got full scholarships but both of us finished our Masters with no debt. It can be done.
2. If you get married, live on one income until kids come around. This has been the single best financial decision we have made.
3. Budget. I will go against Dave Ramsey and say that not everyone needs to have a budget, but if you want to reduce the amount you spend, you must. You have to decide what is worth cutting - eating out, clothes, groceries, tv/cable, ... My wife and I basically didn't do anything besides pay bills and buy groceries for about two years.
I could go on...

This is where many run into problems. One couple I sat down with the wife refused to give up her monthly manicures, pedicures & cut down on the monthly shopping sprees and the man refused to give up the $1,500 hunting club dues and routine trips to the golf course with the guys. Result? They stayed living from hand to mouth and to this day have yet to put a dime into savings or retirement. That's been almost eight years ago now.

bama_wayne1 · Mar 10, 2014

Bamabuzzard said:
Dave Ramsey posted a pretty good article on fb yesterday about the lack of retirement savings in a large number of society. Granted there are those who truly cannot set aside for retirement. Their income barely is enough to cover essentials. But that's not who we're addressing here. We're talking about those who have enough income to cover expenses each month but some how find themselves barely scrapping by due to frivolous spending. Yet will tell you "We just don't have the extra money to put into retirement/savings right now."

I'm sure many of you have friends who you can point to and say "Yeah, we know some people like that." We've had some of our friends ask us (over the years) why we don't "treat ourselves more" with vacations, weekend getaways (which we finally did after last month) etc. Our standard response is "If we can't pay cash for it we don't do it." We do not own a credit card, we put X amount of dollars per month into my retirement, her retirement and into an emergency savings account. What's left over after that goes to pay the bills and do some odds and ends entertainment/recreation (like eating out or taking kids to a movie etc) and the rest stays in our bank account. Yes I'm a Dave Ramsey disciple on somethings and one of those things is "If we can't pay cash we don't get it or do it."

So in saying that. If you had an opportunity to give any tips, advice or life money lessons to the younger generations on how to live below their means. What would you tell them?

As a Dave Ramsey disciple are you allowed to acquire debt for vehicles?

Bamabuzzard · Mar 10, 2014

bama_wayne1 said:
As a Dave Ramsey disciple are you allowed to acquire debt for vehicles?

We don't do that. But I did say I was a Dave Ramsey disciple on "SOME"things but not all things.

We don't do the cash in the envelope method either. I take aspects of Dave's methods and apply the ones that I think would help us the most and that we realistically can do. I know better than to think I am going to buy a vehicle for my wife and kids to drive around in for under $10,000 cash. Not going to happen. I would, but not with them. My truck has been paid off for about eight years now so I don't have that much of a problem carrying one car note. We're about to have her's paid off and by the middle of the summer 2015 we'll be car note free.

bama_wayne1 · Mar 10, 2014

Bamabuzzard said:
We don't do that. But I did say I was a Dave Ramsey disciple on "SOME"things but not all things. We don't do the cash in the envelope method either. I take aspects of Dave's methods and apply the ones that I think would help us the most and that we realistically can do. I know better than to think I am going to buy a vehicle for my wife and kids to drive around in for under $10,000 cash. Not going to happen. I would, but not with them. My truck has been paid off for about eight years now so I don't have that much of a problem carrying one car note. We're about to have her's paid off and by the middle of the summer 2015 we'll be car note free.

Yes, that is my feeling as well. I paid cash for my truck and paid about 25% down on the last family car. That and a mortgage is all we carry. Vacations and such are out of pocket. If anyone doesn't max out a 401K, they must enjoy paying taxes.

jthomas666 · Mar 10, 2014

The specifics of Ramsay's plan may not be for everyone, but I think everyone can benefit from taking his seminar, for the simple reason that it makes you more aware of where your money is going--and that alone is a huge help.

We're going through a rough patch at the moment, with a boatload of unexpected expenses. If this had happened six or seven years ago, before Dave Ramsay, we would have been hosed. Now, well, yeah, our reserves are pretty much gone, but that's the point--we had the reserves.

DzynKingRTR · Mar 10, 2014

when I became unemployed in 2009, I learned a few things about myself. One was I wasted my money for too many years. Now that I have a job again, I have paid off credit cards and now I have no credit cards. Now if I want something my rule is I must have the money to buy it. If I do not have the money chances are I do not need it. Unfortunately I wasn't this smart in school and I have a bunch of student loan debt. I am paying it now but it has been rough, paying that and a car payment. My car will be paid off in 2 years and once that is paid I will start paying double on my student loans. My goal is to be debt free in 3 years. Unless some unfortunate event happens I should be able to do it. (this is me though so I am pretty sure something will go wrong with my plan.)

plan B is just win the lotto.

TideEngineer08 · Mar 10, 2014

Stay away from student loans. My wife and I both did them, and they are a huge weight around our necks right now. I would love to turn back time and do things different regarding our choices on college and the method for paying for it.

bama_wayne1 · Mar 10, 2014

DzynKingRTR said:
plan B is just win the lotto.

Or you could just bet somebody you were going to be struck by lightning ...

tidefanbeezer · Mar 10, 2014

Learn to budget. This has been the key to our success. My wife and I dove into the Dave Ramsey method a few years ago. While it was pretty neat to watch our debt shrink and our savings grow, the most eye-opening thing we did was budget.

This was huge for us. The first thing we did was track what we had spent the previous 2 months. You'd be amazed at how much money disappears into things you can't even recall a short time later. It was like we had a black hole in our bank account. When we began taking our income and spending it all "on paper, on purpose" at the start of each month, it became easier to avoid those black holes. It also gave us a greater sense of control over our finances and made it much easier to live on less than we make, because we can plan for most things we want to do (which leads to finding inexpensive alternatives).

Now we do our budget in ~2 week chunks (because that's when I get paid). Life is a little less complicated when there is a plan you can execute against. You can't plan for everything (hence the need for an emergency fund), but you can plan for most things.

As a bonus, budgeting forced to work on how we communicate on the often stressful topic of money. This in turn improved our overall communication, which has made for a much happier marriage (not that we weren't happy before).

hollisx4 · Mar 10, 2014

Originally Posted by DzynKingRTR

plan B is just win the lotto.

bama_wayne1 said:
Or you could just bet somebody you were going to be struck by lightning ...

Now who wants to dream about getting struck by lightning:smile:?

Jessica4Bama · Mar 10, 2014

I opened up an investment account when I was in high school. I now put $100 a month in it. I have mine in a non-taxable Roth IRA. I don't know where my money is going per say, but it is increasing.

Bodhisattva · Mar 10, 2014

One thing about my wife that I greatly appreciate is her intensely practical nature. She's not one that does recreational shopping or needs to have a wardrobe that could clothe a small nation. Nearly every month we put extra towards investments and/or debt reduction. Trips and other big expenses are paid for without taking on debt. Financial peace of mind is a wonderful thing.

Bamabuzzard · Mar 10, 2014

jthomas666 said:
The specifics of Ramsay's plan may not be for everyone, but I think everyone can benefit from taking his seminar, for the simple reason that it makes you more aware of where your money is going--and that alone is a huge help.

We're going through a rough patch at the moment, with a boatload of unexpected expenses. If this had happened six or seven years ago, before Dave Ramsay, we would have been hosed. Now, well, yeah, our reserves are pretty much gone, but that's the point--we had the reserves.

Yeah, it sucks to watch the savings go bye-bye. But as you stated, that's what they were for to begin with. Same thing happened to us several years ago. An unforeseen event incurred thousands of dollars of expenses. Like y'all, if that would have happened earlier in our marriage we would have been toast.

The entire Ramsey plan can be unrealistic for a lot of people. But I believe there are aspects of it that are good for just about anyone. Anyone who wants to truly get hold of their finances and having it go into that mysterious black hole each month.

chanson78 · Mar 10, 2014

jthomas666 said:
We're going through a rough patch at the moment, with a boatload of unexpected expenses. If this had happened six or seven years ago, before Dave Ramsay, we would have been hosed. Now, well, yeah, our reserves are pretty much gone, but that's the point--we had the reserves.

It sounds like my gremlins from last year travelled to your house

Mold remediation and a whole new heat pump + condenser hurts. Both were paid for but hurt significantly. Only now is the emergency fund getting back to the 6 month range. Good luck, and enjoy spending more time with the family, which I did find was a nice by product of not having enough money to waste on going out to eat or anything else

Bamaro · Mar 10, 2014

Patience is a virtue (and also less costly)

How to best live below your means? (Advice to the younger generations)

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