I've recently found myself trying to explain why our monthly expenses are far less than other family's. For example, people have a hard time believing that our wireless phone bill is only $70 a month (because we don't have smart phones with data or text messaging plans). The truth is, it's all about living within our means. My husband and I make sacrifices to keep our monthly expenses in check, so we have money left over to save for the future and have a little fun along the way. Here are three examples of ways we are living within our means.
Saving 10% of our bi-weekly income
Some experts are currently recommending people actually save more than 10% of their income, but that isn't something that fits within our budget. Right now we are saving 10% of my husband's bi-weekly net income, which means we are contributing no less than $200 to our savings every two weeks. It's important to keep in mind that $200 is our minimum, and that we often contribute more than that.
Our mortgage payment is 12.5% of our gross monthly income
We live in a state where the cost of living is extremely low compared to places like New York, New Jersey, or even Illinois. In our state, $200,000 can buy a massive home in the best area that comes complete with high-end finishes; however, those homes come with monthly payments around $900 a month before any escrow payments. We knew something in that price range was out of our budget, so we crunched the numbers to determine what we could comfortably afford. In the end, we ended up with a $70,000 mortgage, and an overall monthly payment of $500 a month including an escrow for taxes and insurance premiums. I think keeping our mortgage below 15% of our gross monthly income is a perfect example of living within our means.
Saving for large purchases
There was a time when I used my credit card to buy things I couldn't afford to buy outright. While it did mean I got the item I wanted, it also meant I was going deeper into debt. In early 2011, my husband and I paid my credit card balance in full, and decided to only make large purchases if we had the liquid funds available to do so. Now, all purchases that are over $250 have to be saved for separately. Forcing ourselves to save for bigger purchases also forces us to live within our means.
Living within one's means isn't always fun or easy. It takes time, effort, and sacrifice, but the end results are worth it all.
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