Do you live within your means and how?

Used to have a Starbucks-a-day habit but last year I went through a bit of a financial crisis and started slashing things from my purchases. First went the lattes and green tea frappucinos, which averaged at least 15 bucks a week, if not 20 bucks a week. I dug up the cappucino machine that was a Christmas present from years past and took my lattes to work. Starbucks is a once every couple weeks thing for me now, if anything.

 

No. I don't.

I'm so far out of my means, I can't even see them.

 

Wrong. You pay taxes when you put money into a Roth IRA.

The money you put into a Roth has already been taxed (one way or another).  There are no additional taxes at the start.  What isn't taxed is the profits generated from the investment down the road, as long as you take it out after you turn a certain age.  Any withdrawals before that age will cost you a tax on the revenue and a penalty.

 

OK, sort of the same thing. You pay taxes ON money you put into a Roth IRA.

 

I will repeat.  Finding the right broker is important.  Ask around to the people you trust.  Interview them.  I got lucky because a friend changed professions right when I was looking.  The first broker I picked was awful. . . the antithesis of everything bad about brokers.  My current guy is the best. . . almost like on one of those commercials where the broker is talking to the daughter on the wedding day.  "That's not my father, he's my broker."

If you can find the right person, it makes all the difference.  Then stay pro-active.  Ask them about decisions on funds, etc.  

IJAG:  If you are living outside your means, then stop and evaluate what you are spending your money on.  I started a book about 10 years ago that has a page for each month's expenses.  It lists all the costs that are fixed (rent/mortgage, car payment, etc.) and spaces for all my credit cards, utilities, etc.  If I have a balance being forwarded from a credit card, it is listed, along with what I spent in the last month.  If I pay my car registration or insurance, I add it to the list.  After a couple of months, you can get a pretty good read on waht you are spending and where you can save some money.

The biggest mistake people make is that just because they have the ability to acuire something, it doesn't necessarily mean it is a good idea, especially if it means taking on debt.

 

When I move and have the ability, I'm going to start putting money back into my mutual fund that I have taken out of it over the years. My grandfather started it for me, and it yields a lot more interest than a savings account. It's VERY helpful to have that amount of interest added when I'm still starting in my career.

 

Four years, 9 months left on the mortgage.

Credit-card debt? I'd sooner slit my wrists.

Save 8% of paycheck. Would save more, but a 10-year mortgage REALLY eats up some serious cash. Best decision I ever made, though.

And right about the time the mortgage is paid off and I'm 100% debt free . . . Iran and North Korea will launch nukes and the world will end.

 

We have 14 years left and hope to have it gone in less than 10. Just imagine how nice it will be to not have $2,000 in mortgage payments every month. Woohoo.

 

I live paycheck to paycheck. I'm about as irresponsible as a person could be. I have bounced checks only because I neglected to deposit paychecks, sometimes for as long as two weeks.

I have expensive taste to a degree that might require professional help. As an example, I recently went to the grocery store to buy some stuff for dinner. The outcome? chicken breast, gourmet mozarella cheese (about $7 for a little glob), prosciutto, cannoli from the bakery, the most expensive bottle of extra virgin olive oil on the shelf, a packet of bernaise sauce, which requires an entire stick of butter for preparation, a can of mushrooms. Hell, there's probably more. The fact is that I made dinner for no special occasion at all and spent more than $30 on it. And this is an ordinary thing. More recently, I made italian subs with about $25 of meat and cheese for two people.

When I'm shopping for anything, I look for the most expensive and buy it with the notion that it's the best quality. In most cases, that's true. But you can't buy a $50 bottle of champagne if you don't have the money to replace a warped tire (something I did just a few months ago).

Now, I'm not destitute. But I prefer to live right on the edge. The result is a lot of unnecessary aggravation when a surprise, such as a recent root canal, pops up.

As such, my goal for the fall months is to use a small inheritance check to stay a month ahead at all times. This should pay off big, partly because I wait until I receive final notices for bills before paying them. It's not that I don't have the money earlier; it's just that I prefer to spend the money on something else, such as gourmet Italian subs, and then wait until the last possible moment to pay the bill. By paying bills when I receive them, I could easily save $50 per month in late payment fees.

 

But it's not true that eating healthier is cheaper. The freshest stuff in the grocery store (produce, dairy, meats) is the most expensive, and if you have special needs or want to buy organic, forget it. There's a reason a certain health-food store is referred to as "Whole Paycheck".

As for living within my means, I do it, but it sucks. I'm at the age where cousins, friends and former classmates have houses, nice cars, children, take vacations, etc. I can't afford any of that. I don't think I would even qualify for the credit line to pretend to afford any of that.

 

And kids, here is a superb example of what not to do. (No offense to HeinekenMan, who is certainly free to live his life how he sees fit.)

I'm fortunate enough to have a fairly large investment account that my father started for me when I was a kid. It's money that I used for college and will one day use for a down payment on a house, and it's there in case of an emergency, but I live on what I earn. I put a decent chunk of my salary into my retirement accounts and save money where I can, but I'm not a miser.

I tend to have expensive taste, but I've learned to control my urges. I buy nice stuff, but not near as often as I did right out of college.

Eating healthier is cheaper if you eliminate the junk -- like two or three Cokes a day or the Snickers bar when you get gas. Eating healthier is definitely not cheaper if you do all your grocery shopping at places like EarthFare.