Living below your means is one of the most critical aspects of living a debt free life. It’s a sure fire way to keep more money in savings and less money on the plastic. Many people in debt fail to set a monthly budget, which ultimately leads them to overspend and spend money without knowing how much discretionary income is left over each month.
In today’s society, it’s difficult to live below your means with new technology coming out every month. It’s difficult for me to even keep up with how many iPads and tablets are out there today. I’ve outlined 5 REALISTIC ways you can watch your spending.
5 Ways of Living Below Your Means
- Start a Spending Journal: I’ve mentioned this a few times in the past, but starting a spending journal will help you see where your money is going every month. I’m not going to lie, it’s a tedious task but the rewards will be huge. I started a spending journal a while back ago, and I found myself spending way too much at the convenience store (gum, soda, bottled water, & coffee). Spending a few bucks here and there might not seem like a lot of money, but once you add it all up you’ll start to see how much money you can potentially be saving.
- Reduce Your Cable/Internet: One of the first things I did when I tried to reduce my spending was to contact my cable provider. What’s the point of having premium cable channels when you barely watch TV? If you contact your cable provider, there’s a pretty high chance that they’ll lower your bill in order to keep you as a customer.
- Separate Needs & Wants: This is perhaps one of the most difficult things to do. We’re all driven by “wants”, and I don’t blame you. There are numerous of times I wanted to get an iPhone4s because of all the hype, and I even had a special “renewal” rate where I could have bought one for $200. However, I quickly realized that I wasn’t in need of a new phone. My 1 year old Motorolla Droid was working just fine. Before making a purchase, ask yourself these questions: “Do I really need this? Will I regret buying this next month? Can I be using this money to apply it to my credit cards?” If you answered “yes” to any of these questions, you might want to reconsider making that purchase.
- Reevaluate Your Assets: One of the best decisions I’ve made was to sell my car while living in the city. Aside from the numerous parking tickets I received, there are external costs associated with owning a car such as garage parking, meter fees, gas, valet, and insurance. I know some of you may need your car to travel to work, so it’s understandable if this isn’t a viable option for you. However, try to challenge yourself to see if there’s any public transportation you can take to work and try it out for a week. The same goes for your apartment/mortgage. If you’re currently renting an apartment and you’re struggling every month, it’s probably a sign that you need to downgrade your housing costs. Your rent/mortgage should not be more than 31% of your gross monthly income. There are times where you have to sacrifice what you love most, in order to have what you want most in the future.
- Eat in more, eat out less: Nothing compares to a nice home cooked meal. Most of us make excuses saying that we’re too busy and tired to prepare some food. Challenge yourself to reduce your spending at restaurants by only eating out a certain number of times per week. When cooking at home, you can also take leftovers to work. You’re sure to save atleast a few hundred dollars per month by not eating out as much.
These are the most basic steps in reducing your costs and living within your means. I’ll let you in on a little secret of how to live a debt free life: spend less than you earn!