Live Below Your Means

When people talk to me about investing, they usually want to start somewhere around the middle of the idea with questions like:

Hey, what should I invest my money in to make a lot of money?

Yo, I heard you make a lot of money on your investments, what mutual funds do you buy?

So, Mr. Investing guy, now that you lost all of that money in the stock market (after a big slump) what are you going to do now?

These are all great questions, but I always end up just referring people to www.fool.com because when I try to answer them, they really don't understand what I'm talking about.

Before I can save and invest money, I first have to have some money that I don't spend. I know several people, many really great friends, that struggle with this idea and have a very difficult time saving money.

Even when I was a "spender" I never felt like I needed to spend all my money and then use credit or sell things to get more stuff...so I have to say, I really don't understand this way of thinking.

When I was spending too much, I was mostly using my credit card like a fool.

I do remember once right before my wife and I were married, money was very tight. It was an unexpected situation where I had another Air Force co-worker that was sharing rent with me.

He got orders to move to Korea, decided he didn't want to go and so he separated from the Air Force. I could no longer afford my RENT!!

I had some savings, and my ex-roommate "to-be" gave me as much money as he could before he moved out. I also got a one-time Air Force aid loan to pay rent for one month.

My wife and I got married and moved into base housing as soon as we could to get out of the "not enough money" situation.

That was extremely un-fun for me. I was ok, but not having enough money, makes you have to make some strange choices. Such as, "I need to eat, and I need gas for the car....hmmm".

"Less food and less gas", I think was the solution. These are choices no one should need to think about. When these extreme cases of "lack of money" happen to you, you need more help with your money situation then just information from a web page.

What I am talking about is a lot less dire. Some ideas off the top of my head (there are so many out there!):

Live below your means: Pack a lunch - save $5 - $10 or more per day
Live below your means: Bring drinks and snacks from home - save money every day
Live below your means: Take the time and effort to get money back from rebates: There is a reason that retails use rebates to convince you to buy something.

Most people get the "thing" home, lose the receipts, forget about filling them out or worst yet...make the attempt to get the rebate and then quit because "it's too much trouble"....THAT'S YOUR MONEY!!!
Live below your means: Shop at outlet malls, save a bundle off retail.
Live below your means: Plan ahead before you buy plane tickets. If you can fly SouthWest Airlines, the more time before your fly date, the cheaper the ticket.
Live below your means: Buy coffee at the grocery store and make it at work (or quit drinking coffee...I quit for a while, but I'm back to it again :-(. This will save a lot of money compared to buying a Venti Bold Starbucks everyday.
Live below your means: Replace all of your light bulbs with "low watt" bulbs...they last forever and use hardly any energy. This is for you...not the world or the environment...it will save you every month on your electric bill.
Live below your means: Use a VCR instead of the DVR...the tapes are big and bulky, but they still work...and are loads cheaper.
Live below your means: Get Netflix...dump cable TV.
Live below your means: If you have high speed Internet, get a Vonage phone or other IP based phone. I get 500 free minutes and never use them all for under $20 per month. The vonage service I get comes with voicemail, call ID, call waiting, and lots of other cool features that are all better then a basic phone company land line.
Think about your cell phone bill and try to minimize your monthly plan or get a pay as you go. This is not for "high volume" users....but do you really need to talk that much? If you do, like for work or something, ok

....but if you are just paying the bill to have a cool phone...that is a lot of money just to make people think you are cool. I gave up on being cool....it costs too much. Be a dork, it's much more affordable.
Live below your means: Turn off the power on your "vampire" devices. We have our computer and home theater set up so we can use power strips to turn off the non-essential items when not in use like and night and during the day while at work.

Good for you electric bill and will send good vibes with your name on it towards Al Gore.
Live below your means: Use coupons for things you need.
Live below your means: Ask for discounts if you can get them. Almost every place on the planet has a 10% discount if you join AAA. Might even make having AAA membership worth it beyond the peace of mind you get knowing you can get a free tow.
Live below your means: Have your spouse cut your hair. Mostly works for guys. My military clipper cut is free because we bought a clipper kit. I really hate to go get my hair cut out somewhere now.

It is so much nicer when my wife cuts it, and free, I just know I am wasting not only money but time and effort going out for a haircut.
Live below your means: Get your oil changes and your car maintained regularly. I don't know much about cars, but prevention is always cheaper than correction. Don't go cheap on tires or brakes for obvious safety reasons.
Live below your means: Fill up your gas tank when it is half full...there are good reasons for saving gas that have to do with the evaporation rate of gas in an almost empty tank that is supposed to save you money...I do it so I don't run out of gas.
Live below your means: Pay off your credit cards every month. The interest payment is too much to carry a balance.
Live below your means: Buy used books for $1. Look hard enough in your town and you can find a book store that will sell used books for $1.

I think for most people this may be cheaper than the library. Even though the library is free...they charge late fees if you don't return them. Spend a buck...read the book...sell it back.
Live below your means: Sell all your old stuff that you don't use on E-bay. Spend time really working on your ad and tell a story, people love reading stories :-).

I could keep typing, but I think you get the idea. You need to keep some money in checking account. Once you have enough money set aside in your checking account to pay your expenses for about 2-3 months (leave that there for emergencies)...

then open a Savings Account. They are easy to set up and pay about 4% interest. Name this account "Short-term savings" and let it build up to about $X. $X will be different for everyone. Now, $X for me now is about $10,000.

Once I have about $10,000 in my Orange account, I talk to Yayoi and ask her if she is willing to part with the money until we retire (at like the age of 70 or so).

If we want to buy a car, or re-finance the house or something...we leave the money there until after we make the major purchase.

If, we are ready to part with the money for the long-term then we invest it in the stock market...oh but wait...I am getting ahead of myself. Those are in future steps...I not sure how many there are or will be...I'll let you know when I finish.

I was going to suggest some books about this topic, but I just googled "Live below your means" and a ton of links came up...so just do that...it is cheaper than a book (even one you bought for a dollar).

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