Living Below Your Means

Living Below Your Means
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It's the way we should all be living and it's the key to being debt free.

• Money & Finances: Banking • Money & Finances: Budget • Money & Finances: Credit Cards • Money & Finances: Debt • Money & Finances: DIY
• Money & Finances: How-To • Money & Finances: Mortgage • Money & Finances: Saving • Money & Finances: Tips & Tricks

The best way to reduce your debts and to save money is to live below your means. But what does that even mean? In a world of credit cards and loans it feels like we're being trained to spend more than we have. Well, that's actually pretty accurate for most of us. We are being trained to buy then next shiny iThing when it comes out. Don't have the money? Don't worry, they'll let you make payments instead. And just as your done paying it off, the iThing 2.0 comes out and it's even shinier! You must have it, right?

So how do we break this cycle? The concept to get beyond this way of living is called "living below your means". It's quite simple, just make sure that you spend less money than you make. Ideally, a lot less than you make. The concept isn't new or revolutionary, and it's just another way of Practicing Financial Wisdom, but few seem to understand what it really means to live below their means.

Monthly Payments

I think the biggest issue most people have with spending money is how they view a purchase. When spending money, break it down into what that item will cost you over its life. The most logical way for most people to understand this is to break it down into monthly payments.

Most people understand monthly payment cycles and, at least the concept of, a monthly budget. For example, if you buy a magazine subscription for $24 per year you're actually paying $2 per month. Don't think of that purchase as being $24, think of it as $2 per month for as long as you get that magazine.

Like that shiny new 90 inch TV (affiliate link)? Yea, me too! But at $6,300 it's a big purchase. If that TV lasts for a full 10 years before you replace it then you'll essentially be paying $52.50 per month for the next 10 years. Think about that for a minute. $52.50 of your paycheck will go to that TV every single month for 10 years. That assumes it will last for 10 years without a repair, doesn't factor in tax, extended warranties, a wall mount, or even the electricity to use it! You'll be paying that price even if you don't turn it on.

But do you see the lesson here? View everything you buy as a monthly expense to help visualize the real cost of ownership to your purchases. I think this is the key to breaking the cycle of living beyond our means. But we're not done yet, let's get into real world examples of how to reduce costs in life.

How To Spend Less - The Easy Way

Saving money and spending less doesn't have to be difficult. It doesn't mean you are no longer allowed to spend money on fun things. It doesn't mean that vacations are now a thing of the past. And it certainly doesn't mean you have to stay at home and eat ramen for every meal.

Cut The Cord

Saving a lot of money is as easy as cutting the cord to your cable or satellite provider. Many cable bills range from $100 to $200 per month. Cancel that non-sense and subscribe to Netflix instead. Hulu is another option and even using both will be much cheaper than cable options. This is easier to do than you think and you can always get over the air broadcasts for free (just grab an HDTV antenna). While you're at it, do you really still need that land line if you have a cell phone?

Reduce Internet Speed

Did your cable company talk you into the super fast speed option? Chances are good that you don't need it. Even if you're streaming videos online, the slower speeds often work fine. At the very least, try bumping down one speed notch and save a bundle each month.

Drop That PMI

Do you have a mortgage on your house? Are you paying for Private Mortgage Insurance, also known as PMI? PMI is an added fee, often $75 to $150 extra per month, that you pay for buying a house with less than a 20% down payment. It's there to protect the lender, not you! If you've owned for a few years and your house value has gone up you may now have 20% in equity in your house which means you can dump that PMI. Call your mortgage company to find out how to do this.


Got a mortgage with a high interest rate? Consider refinancing for a lower rate. Don't get suckered into taking equity out as cash. If you do, you'll be paying that cash back over entire term of the loan! Also look into a shorter mortgage term. While 30 years is the most common, a 15 year mortgage will pay off your loan in half the time. You'll pay more per month but it may not be as much as you think.

Credit Card Balances

Credit cards are great, but only if you don't carry a balance. If you do have a balance that you aren't paying off you should first consolidate that balance onto the card with the best (lowest) interest rate. Then, make sure you pay off as much of it as you can each month until the debt is gone. Paying just minimum is a bad idea, always pay more than the minimum!


Coupons are amazing tools and can save you a lot of money. Use them at the grocery store and choose the places you dine at based on available coupons and discounts.

Eat In

Dining out is fun and often tasty, but also usually far more expensive than dining in. It's also usually not nearly as healthy as dining at home. Try limiting your dining out meals to just 1-2 times per week. Dine in and enjoy a tasty and healthy salad (like Matt's Miracle Salad Recipe) for one meal a day. It's healthy and cheap!


Do you even read the magazines you get? Consider letting them expire instead of renewing them. Or just renew your favorites. Or see if your local library has a subscription and read them for free.

Lights, Fans, TVs

Turn these items off when you're not using them. It's easy to do and can save a bundle in electricity costs. Don't leave fans running in empty rooms. Fans don't actually lower air temperatures so they do nothing at all if you're not in the room. For outside lights, put them on on a timer so they go on and off on their own rather than running all day and night.


LED lights use a fraction of the energy that incandescent bulbs do. They even use less electricity than those nasty CFL bulbs. They're more expensive to buy initially, but prices have come down a lot in recent years. They'll also last a long time so you'll save on replacement costs.

Hot Water Timer

Did you know that you can put your hot water heater on a timer? A hot water heater timer (affiliate link) tells it when to turn on and heat water up and when not to. I have min set to turn on in the late afternoon. This gives us hot water for dinner and evening showers. It then shuts off until just before we wake up, again for hot showers.

Insurance Discounts

Call around for a quote on cheaper car and home (or renters) insurance. Keep all of your policies at one company and ask for a multi-policy discount.

Save On Driving

Gas isn't cheap! Make sure your car tires are inflated to the recommended PSI setting. Just open the drivers door, look for the sticker that shows the front/rear PSI settings and fill them to that number. Check monthly. When driving, keep a light foot on the gas rather than giving it too much gas. Both of these will improve your mileage and save on gas and thus money.

Avoid Recurring Fees

Any time you can avoid a recurring monthly fee you probably should. Look for bank accounts with free checking. Buy an item outright rather than making more expensive monthly payments. Even the smallest of monthly fees add up into big savings when you remove them.

Cell Phone Buying

Avoid buying the latest iToy. Stick with a phone that is a generation older as we talk about in Is Google Project Fi Right For You?. When buying a phone try to buy it outright rather than making those $20+ monthly payments for 2 years. And do you need that cell phone insurance? You're an adult, be responsible and you'll be okay. Why spend hundreds a year on cell phone insurance?

Cell Phone Data

I can't help but wonder what the world was like before cell phones and data. I lived it back then but going back would be like the dark ages all over again. Still, you don't need the mega-family-sharing 50Gb data package. Maybe you need a provider that gives you unlimited options, but shop around if you do. If you don't need unlimited data, look into money saving options like Google's Project Fi, see Is Google Project Fi Right For You? for more details on that.

When I'm using data I don't waste it on Netflix, endless Facebook and Instagram scrolling, or mindless youtube cat videos. I keep Google Maps on street view, not satellite view which would use more data. Forget streaming music, download songs to your phone instead. It's easy to do if you try.


Amazon Prime is an amazing thing. For less than $90 per year, let's say $8 per month or so, I get free shipping on anything I buy. I also get access to free music, movies, and televion shows (works like Netflix). It's a no brainer for me.

Make It

Try making things yourself! For example, we save money by making our own laundry detergent and hand soap. It's easy, cheap, and cleans like any other stuff we'd buy. Only it's safer and doesn't stink!


Remember that time when we all needed awesome color printers for all those photos we printed? Then we decided printing photos is often not needed. Yet my color ink jet still costs me a bundle to use. Even if I run out of colored ink it won't let me print in just black. The solution? I bought a cheap laser printer with black toner only. It's all I need and super cheap to run (with cheap off brand refills). If I do need to print something in color I can do so at any number of local places or just have it done online and shipped to me. No more expensive ink or paper to deal with.

Impulse Buys

This is the easiest, yet toughest one. Don't buy things you don't need! Do you really need that magazine or candy bar at the checkout counter? No. Are you going to the grocery store while hungry and buying food items you don't need and don't eat? Then shop after you've eaten a meal. Do you really need the $50 jeans when the discount place has some for $20? If so, then try your local thrift shop which often has big name brands that are virtually new for pennies on the dollar.