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Live Wisely and Get By on Less

Submitted by: anonymous 01/19/2009 3:32 PM

We have a family of three: My husband, my teen son, and me. We live in a $1,100 income a month, but we don't go hungry, ALL our utility bills are up to date, and we don't have any car, home, nor credit cards debts. How?

We learned to live in what we could afford, instead of depending on mortgages, loans, or credit cards to pay for our bills. When we wanted something, including the house, we saved first, then we bought, according to our means.

It took us a little longer than other people we know, but, today we are debt free, while they have years to come to pay for their debts!!

WANT A GOOD TIP? MAKE A PLAN. SAVE FIRST. BUY LATER!! DON'T WASTE MONEY ON THINGS THAT YOU DON'T NEED! AND LEARN TO BE CONTENT WITH WHAT YOU HAVE, NOT WITH WHAT YOUR NEIGHBORS HAVE!!!

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Comments:

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That sounds great that you live in a home without a mortgage. However, we live in an area where median house prices are $500,000. It's pretty hard to save that much and buy it without a mortgage.

Posted by anonymous on January 20, 2009 8:53 PM

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Before I purchase something, I ask myself "do I WANT it or do I NEED it"? Majority of the time it comes out to WANT, and that is when I walk away. Yeah, I could buy the $10 pair of earrings, but it will end up in my jewelry box along with the other earrings I bought and never wear, and besides that, $10 goes towards getting my kid a new pair of sneakers. Look around you, your house is crammed with stuff (if you don't think so, then check out your attic!!!) You save when you have, not when you don't have. We are a family of 5 with one full time paycheck coming in and a monthly mortgage, we have no debt and are able to put money away each month. Remind your children how hard you had to work for your money, and it could go better towards food, winter jacket or shoes instead of the toys.

Posted by Rana on January 24, 2009 9:18 PM

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I admire that you are discipline enough to pay everything off. However reality is somsetimes an unforseen medical problem or a much larger problem. Life is not very kind to most normal folks. Trying to live without is admirable but bombs do get thrown and all the hard work blows up.

Posted by kim on February 01, 2009 12:07 AM

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People used to live like this for years until credit cards etc got so popular. The only debt usually was a mortgage but you couldnt buy a house unless you saved and had a good size down payment. If people had continued living like this there wouldnt be the crisis we now have.

Posted by Dee on February 06, 2009 6:12 PM

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I am 24 - I had all these same ideas about finances, about saving and not spending, taking a minimalist approach, etc. I was doing great. Then I was diagnosed with Lupus, and had to go on disability.
Plenty of people recognize the worth of these financial philosophies but then life happens.

Posted by Anonymous on February 07, 2009 1:35 PM

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Yes, unexpected events do happen and that is precisely why we need to be more responsible with our money. If we can save for an emergency fund, then we are able to deal with those unforeseen events, rather than needing to rely on credit to bail us out, leaving us with more to deal with later on.

Once we have a decent chunk in savings for emergencies, we can then start saving for things we want to buy and extras that we don't actually need. In this financial crisis, we need to take responsibility for ourselves, pass on good habits to our children and stop wanting what we think everyone else has. We need to learn how to live well within our means.

Posted by anonymous on February 10, 2009 12:57 PM

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Not having a mortgage isn't always the wisest plan. A house can be a great investment.

You can put your money in the bank, and earn less than 2% interest on it. Or you can buy a house and pay around 5% interest, but long term it will generally appreciate. Especially if you are willing to buy a foreclosure or a house that needs some work.

We bought our house with about $10k down six years ago. We could sell it now and make $70k profit even in this crappy economy. How long would it take you to turn $10k into $70k by saving it?

And in the mean-time you are paying rent, which is just paying someone elses' mortgage. They get all of the tax breaks for owning the property, you gain nothing.

Posted by anonymous on February 24, 2009 3:16 PM

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I worked saved and my home was paid for, then came Katrina,no government agency helped me. I had to mortgage my house to repair it so i could live in it again. so once mortgage free is no gauratee,Oh i am 70 years old and will not live long enough to be mortgage free again. but I thank God that I have a home.

Posted by Pat on February 27, 2009 7:58 PM

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Good job! We have ALWAYS lived that way also - even when everyone else around us was not living that way, & before the now trendy "living green" or "living frugally" became popular.

If people would have realized what they were doing, they would would not be in the trouble they are now in, and they would HAVE money to make a down payment and live debt-free or almost debt-free! Whatever their circumstances are. But it takes living your life with sacrifice (not having everything the people around you have, driving a car longer, buying/replacing what actually matters to you instead of just going with the flow), and accepting that you will not always be trendy or "in," or have the best of everything at all times.

It's the "keeping up with the Jones's" that gets people into trouble. They HAVE to have everything all their neighbors/family/friends/coworkers have - whether it really matters to them or not. Most people had gotten into a 'be damned if I'm going to do without' attitude and spent way more than they had. And for what? To impress people who were not impressed! Other people could give a damn because they were only concerned about impressing other people themselves. No one was impressed - only jealous or competing with you. Everyone's goal was to be the one on top, but when you got to the top, noone would acknowledge you anyway because that's where THEY wanted to be. And to acknowledge you meant they had to accept that you had outdone them! What a twisted reality!!!

Why do people have to have $500,000 homes? Because they 'have' to keep up with other people. You can buy a very nice modest home in any city for a LOT less than that. OMG, you mean do without the latest trend of flooring, lighting, countertops, etc. How can we live like that? Well, I'll tell you how.

We spent the last 20 years upgrading our home as we had money and as things needed to be done. We did not do it all at once and we did it debt free. Today we do live in a very nice, totally upgraded home, and we'll continue to upgrade as things NEED to be done. Our upgrades are very different than what we had originally planned when we bought the house. Do you know what that means? Had we borrowed the money and got it done all at once, we would probably just now be paying it all off, and we'd need to change it ALL again because it would all be outdated now! When you do it a little bit at a time, you do what needs attention the most or what HAS to be done (poor wiring means you forego the latest trend of granite countertops and get your wiring upgraded). Yes, at times parts of the home are somewhat outdated, but I'd rather live that way than totally upgrading the whole house at a time - multiple times.

When you get into the mindset of having to live in the perfect home, you are also buying into the whole lifestyle, because you also have to have multiple NEW cars. To always have a NEW car, you waste a lot of money driving a lot of new cars off the lot to trade in within 2-3 short years so you ALWAYS have a NEW car. And pretty soon it's not just having a NEW car, but a luxury, top-of-the-line new car. You can't be seen with anything less than xxx. You also HAVE to have the trendiest furniture, home decorating, clothing, and lifestyle - which means the 'in' vacations, coffee shops, gym memberships, etc. etc. etc. It had no longer been enough to go on vacation - it had to be somewhere exotic or at the very least out of the country.

This never ends because to always be trendy, you ALWAYS have to be replacing what you already have to keep up with other people. Everything ages and when you HAVE to always have NEW or the LATEST, you are wasting money replacing the perfectly good items you ARE STILL MAKING PAYMENTS ON!!!!! Why not get your money's worth out of what you spend and not worry so much about what other people have?????

We drive used cars - I can almost hear the gasp. We SAVE up to buy, remodel, upgrade! If we don't have it, we don't spend it!

Posted by anonymous on February 27, 2009 10:42 PM

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I have heard that when you want to buy something that you want, but don't really need, you should think about how many hours you would have to work to pay for it, that puts it in a different perspective.

Posted by j on February 27, 2009 11:30 PM

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Thats an awesome tip! We just sent our new jeep back to get rid of the payments and we are using my hubby's fathers old beater instead.

we are in the process of trying to get out from under our Home adjustable rate mortgage and if we are unable to negotiate with the mortgage company then we will sign the home over to the bank. We understand this may mess up our credit for awhile. But we have no intention of ever having a credit card or home/auto loan again. these things have brought us such misery over the years and we are happy to finally be in the process of freeing ourselves from them.

We will of course make sure we are renting an apartment before we sign the home over though,since we hear it is hard to rent once you go into foreclosure or short sale.
We have once such apartment complex in mind that was very good to us and we have a lot of friends who still live there.
We would miss the yard but not the yard work or the HOA fees and the high insurance/interest rate costs we have to pay.

It would be better to be free and downsize then keep our standard of life and be a slave to our debts. I think your tip was very very wise and right on point!

Posted by anonymous on March 02, 2009 5:04 PM

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Amen to the 20-year renovation! I've lived in my 57-year old house for almost nine years, and do something major every 2 or 3 years, as money permits. Although I still have a list of things to do, like yours, the house I now have is a far cry from the house I bought.

I don't have the square footage or all the bells and whistles of my $500k/3000 sq ft friends, but I also don't have the big mortgage, heating bills, stress...To each his own, but sometimes less really is more.

Posted by anonymous on March 02, 2009 7:13 PM

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Great job being so disciplined about your finances, but renting instead of owning is really foolish. Just like someone else already pointed out, you are missing out on tax deductions, and you still have to pay the rent to someone (and more than likely your rent payment covers the mortgage on this rental property and then some, since your landlord has to think about having the money on hand for any necessary repairs). I do agree that you should have the cash on hand before you do any upgrades (especially cosmetic stuff). 3 years ago I bought a house and qualified for the mortgage with my income only (at the time we had two incomes) and now that we are down to one income, I'll have to wait for that new kitchen and renovated bathrooms, but the mortgage payments are all made on time.

Posted by anonymous on March 04, 2009 7:50 PM

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Yes, having an emergency fund and not having credit card debt is a good idea and when life happens it is there but don't fool yourself. I saved 30% of my income off the top. I invested conservatively and rarely used my credit card. I am forever grateful to my Financial Planner for that. However, after three years out of work due to illness and trying to navigate the disability process, that is all gone. Don't be so smug February 10th. It could happen to you.

Posted by Anonymous on March 05, 2009 3:56 PM

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I do agree that owning a home is a great thing, however, don't forget there are people out there that renting is preferable to owning, even if they can afford to buy.

For some, keeping the lawn mowed, snow removal and upkeep and maintenance to the home are issues they must consider: the cost involved to do the work themselves, can they or are they able to do the work, or must they hire someone to do it for them?

But by renting - all of that is the landlord's responsibility. Just make sure you get a good place.

For example, someone who travels quite a bit for their job or for pleasure
Older Adults
Widows
Physically challenged or injured and unable to do it themselves

So don't think that renting is money thrown away. It might actually be cheaper on some folks to rent than to own and have to deal with these things - or might provide a better quality of life due to less stress about how to get the plumbing repaired on a fixed income.

Posted by Renee' in Missouri on May 23, 2009 4:19 PM

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I have always owned my own home,( home and property Passed down) and when i look at people who rent i think they really have it made, most people that own their home have a mortgage payment or home improvement payment, etc;, you have property taxes, something breaks down you need repair or buy new. Home owners have so many responsibilities , costly ones, renters just make one payment to have a roof over their heads and other living expenses they have. We have always lived frugally, i worked, husband was in construction, with jobs on and off,when the jobs weren't there, we always found a way, anything from cleaning the church to recycling aluminum cans. Buying most clothes from thrift stores, used autos, learning to cook and use everything on hand, not purchasing more than we could afford to comfortably pay for. We had many hard times, but when times were good we put money away for that rainy day that always comes. We definitely did not keep up with the Jones. Just lived our lives to the best of our ability . And learned to make do. And be satisfied with what we have.

Posted by anonymous on June 30, 2009 12:10 AM

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