Originally posted by Inkstain82
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Spending less than you make - it works
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Originally posted by am_vanquish View PostI found those links to be fascinating. Does anyone have any other fun sources for behavioral ecnomics or "prospect theory"?
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Thats a very nice story in deed, I hope that people would be able to gain something from it.
In my opinion spending less than you earn has a number of advantages which are usually neglected. To point a few of them,
- You begin eliminating your debts
- You begin to save
- Your stress level falls
- You are now able to explore possibilities closed to you beforeLast edited by Alex_Adviser; 06-24-2009, 11:32 PM.
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It is obvious that you should spend less than you earn but the trick is that you should do it as soon as possible because if you are under debt due to your excessive spending then it will become very difficult for you to get rid of those loans.
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Originally posted by Inkstain82 View Postcommitting to the simple plan of setting a budget and spending less than you make can turn around even the worst financial circumstances.
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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.
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Originally posted by kork13 View PostI've been saving/investing about 32% of my gross every month
I've been living on ~68% of my income.
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).Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
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