It starts innocently enough with the home mortgage. You find out what the bank is willing to loan, then you get “the nicest house you can afford.” Next comes the new car loan, the credit card with the $20,000 limit, and the generous home equity line of credit. You say, “Yes, yes, and yes! And why shouldn’t you?
They say that you qualify, but who are they?
Meet your creditors: the banks, the underwriters, the financial institutions. It’s in their best interest for you to borrow as much as possible, and for those interest points to just keep adding up. It is not in your best interest! We live in a society where it has become the norm to spend every penny earned, and then borrow more on top of that, as much as 30%. It has become such a standard, that most of us don’t even stop to ask the question, “Is this in my best interest?”
By going along with their numbers, you’re turning over the power of creating your own spending plan, and your own financial future as well.
You’re robbing yourself of a secure financial future. One of the key principles to living rich is to live below your means. In a world where people have grown accustomed to living on credit, I admit this might not sound like very much fun. But if you want to live your definition of a RichLife, you have to start making the choice to keep the bigger picture in mind. You have to pay the price now, so that you don’t end up paying the cost later.
And keep in mind – the cost down the road
is always much higher
than the price you pay now.
The solution is simple. Even though you can afford a bigger house, you don’t. Even though you can afford a higher car payment, you don’t. You invest the difference, put that money to work for you, and 10 years from now, you have something to invest in your future, the future of your children, and the community at large. This puts you back in charge of both your finances and your future.
You can become wealthy by having more income
coming in than going out,
whether you are earning
$150,000 a year or $20,000 a year.
The choices we make today will be what we are living with 5, 10 years down the road. Make the decision to start building a sound foundation for your RichLife. Start with your income, and break it down into the following percentages:
- 10% of your income goes into savings first
- 10% toward paying down debt
- 10% you give away
- 70% to living expenses
And here’s the best part: once that debt is paid off, you can move that extra 10% over into your savings and double the amount of reserve funds without having to change your lifestyle one bit! If you get into the habit now of paying yourself first, your chances for success will increase, even when life throws you for a loop. Having 3-6 months of living expenses in reserve can be very the thing that saves you and your family the next time the company makes cutbacks, or the stock market falls, or the economy crashes.
You can’t control what the economy is doing, but you can make living below your means a part of your life, and increase your chances for success.
Support a healthy financial future and keep things comfortable for yourself. Choose to stop spending before you have spent everything! Base your lifestyle and expenses on less than is coming in as opposed to every penny plus whatever you can finance or borrow.
How do you do it? What’s your favorite activity or pastime that requires no money? What kinds of investments help you to live below your means? I’d love to hear it! Leave your comments below or feel free to post them on my Facebook Page!!
As always …. thank you for reading and sharing your stories!
I am so grateful that you are a part of my RichLife!!
Much love and many blessings ….
Beau
Beau, Great article on living below your means. If we could start everyone on this plan there would be no need for Social Insecurity. I would add one more step though – have at least 10% auto deducted from your salary that goes into a retirement account. If the company matches then at least that percentage. When their debt is paid off they are in the 10-10-10-70 club. 10% giving, 10% Investing, 10% saving for those yearly expenses, and 70% spending. Here is our 30-day Budget Challenge. http://www.debtfreesquad.com/30-day-budget-challenge/