Wednesday, August 03, 2005

Living Below Your Means

Now that we've had our celebratory burst of spending, it's time to get back to the budgeting business.

My husband's new job includes a not-too-shabby raise. While I'd never want to return to the salaries of our early days, living above our means then was not an issue.

We simply didn't have extra to spend! The added fat in the new paycheck requires a little more self control.

Here's my plan:

1. Automatically deposit in savings the "raise money" in each paycheck. Pretend it's not there.

2. Now that we are on a 12-month pay schedule, save the 3rd paycheck during those 2 extra months.

3. Put a one-year moratorium on all purchases over $300, unless they are emergency needs.

4. Accumulate change in the giant jar for a trip to the Smoky Mountains next spring. Don't consider vacation spending anything other than a luxury.

5. Delay one more year any subscription-based services, such as cable internet, tv, upgraded phone or memberships. If we can continue to live without these, the temptation to splurge now will pass.

6. Deposit all insurance checks into savings, rather than replenishing the checking account. Our insurance requires that we pay for prescriptions out of pocket, so banking those rebate checks is a painless way to save. Also, it reminds us of the true cost of health problems, strengthening our desire to eat well and exercise.

I hope these choices don't make our life seem too spartan. How else will we fight the tendency to elevate our lifestyle with each pay raise?

7 comments:

Kendra said...

First let me tell you I logged on to your site last night and all I got was wall paper! Yikes..I thought I had lost you! Soooo glad this morning to find you here to greet me! You are so smart to plan to put the any "extra" $ that comes into savings.I know how easy it is to Not put it aside and poof it is gone! Funny how we could live on x amount then when y comes in we find we Need the y amount now to live on! Or rather Not so funny! You are on the right track. Keep on the path of your dreams.

Kendra said...

Me again..Do you know the words to the song Happy Talk from South Pacific? Listen to it..One line is "Happy talk keep talking happy talk..talk about things you like to do ...if you don't have a dream.. if you don't have a dream...How ya going to have a dream come true!If you don't talk happy, if you never have a dream then you'll never have a dream come true." This is what you and dh do..talk happy talk! When you talk with dh and together with the Lord your happy talk..and dreams...will be on line! Bye! Joyce Meyer is on now so I will go and watch!...

alison said...

Your ideas to continue to save rather than spend seem really well thought out. But forgive me for asking, "why?" I see your profile explaining that you are frugal so that your family can afford to live on one-income, but what is the goal beyond that--as it seems you have succeeded and now exceeded? early retirement? further education for you or dh? son's higher education? just curious as my situation is rather similar

Meredith said...

All of the above? :)

Good question, Alison. We're not saving just for the sheer joy of pinching pennies. First, we need to replace the tuition for my husband's graduate school, for which we paid cash. Second, we need to add more money to retirement accounts--better to add it while we are in our 30's than while we are in our 40's, so it has more time to grow. Finally, we haven't put a penny toward our three-year-old's education (we've been spending it all on my husband's!). That probably comes last on our immediate priorities. We were both lucky enough to earn full scholarships for undergrad--hopefully our son will be able to earn most of his, as well.

Thanks to following Dave Ramsey's plan, we are debt-free except for the house. Better add that mortage to the above list, too ;)

Rygal said...

Thanks for all of your great tips! Your site is one of my favorites! It's great to know I have a budgeting *kindred spirit* out there!

mothersong said...

I am very impressed with your savings strategies. My husband is most likely about to become the principal of the middle school where he is currently AP. My thoughts on his raise mirror your own, to try to put it right into savings.

I have to say that one of our goals for saving really is just to save. We have mandatory teacher retirement taken out of his pay, and we are also a one income family (with a total of nine children). However, we would like to have cash for the sake of cash, and for the sake of the lower stress that having cash can bring. Being able to pay cash for the next car, for home improvements ( we are currently remodeling our house, adding a room, painting everything, and re-flooring a couple of rooms, paying cash) for emergencies, and for the occasional splurge is an important goal of ours.

However, living simply, focusing on our family more than work, enjoying new hobbies and ideas and time to explore them are equally important to us.

My current library book is Choosing Simplicity by Linda Breen Pierce, full of interesting stories of how and why people decided to "downscale". Next on the table? Living With Sheep. Not that I'm likely to have sheep on my quarter acre in town, but a girl can dream!

Meredith said...

Rygal, thanks for the compliment!

Mothersong, these strategies are as-yet-untried (except for the prescription drug reimbursement). I'm hoping that putting my plan in writing will help us keep our goals! Good luck on your husband's advancement ;)