Spending less than you make - it works

[msmorrisonspeaks]

Originally Posted by Inkstain82

committing to the simple plan of setting a budget and spending less than you make can turn around even the worst financial circumstances.

I respect your post. You are so right when you say "...committing to the simple plan of setting a budget and spending less than you make can turn around even the worst financial circumstances". Right! Spend less than you earn. While this seems obvious, Americans are notorious for doing just the opposite. Stop spending and start saving.

[Ima saver]

It also does not really matter how much you make, it matters how much you keep. (save) Live on less than you earn.

[kork13]

I'm going through this right now as well... Both of my roommates are in the process of moving, and I'll be staying here for an extra 3-4 months. So my rent, utilities, and food expenses will no longer be shared, growing my monthly expenses by over $700/mo (18% of my gross income).

Thankfully, I've been saving/investing about 32% of my gross every month, so I can absorb the greater expenses without significant impact. I've stopped my regular savings, slowed down my house savings, and am leaving my retirement savings almost untouched. Once I move and get into a smaller, more affordable place on my own, I will be able to go back to my former aggressive savings plan.

Just wanted to give another example -- I've been living on ~68% of my income. With my expenses going up, I'll now be living on ~88% of my income. LIVING ON LESS WORKS. Even with a fairly significant change in my finances, I'm able to cope with it without much issue.

[buildmybudget]

That is a great story. It's amazing how much a little advice from a close family member can help. The key to building a strong financial foundation is to spend less than you make--and from there the sky's the limit!

[disneysteve]

Originally Posted by kork13

I've been saving/investing about 32% of my gross every month

I've been living on ~68% of my income.

That's terrific, and remember, that doesn't count taxes.

Personally, about 30% of income goes to taxes and health insurance premiums. Another 21% goes to savings. That means we actually live on about 49% of my gross income. My wife does work PT but 50% of her gross goes to 401k and after taxes, her take home is minimal (about $50/week).

[wincrasher]

My operating budget is 31.8% of my take home. The rest goes to savings and toys.

[maat55]

Dad was using Dave Ramsey logic. My guess is that your lifestyle reduction went un-noticed due to the enjoyment of positive gains. Great job.