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The Frugalite’s Ultimate Guide to Living Beneath Your Means

Summary:
While many people advocate living within your means, I don’t think that’s enough. I’m a proponent of living beneath your means. Within is great – it signifies a lack of debt and only spending what you can afford. But beneath is even better, because it signifies that you have quite a bit left over for dealing with a rainy day. Living beneath your means may not sound like a whole lot of fun. It sounds as though a person doing this is stuffing coffee cans full of dollar bills into spaces in the walls, darning socks until they simply can’t withstand another repair, and eating cold beans in a darkened room. In reality, it isn’t like that at all. Learning to live beneath your means can bring you a kind of peace that you never felt

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While many people advocate living within your means, I don’t think that’s enough. I’m a proponent of living beneath your means. Within is great – it signifies a lack of debt and only spending what you can afford. But beneath is even better, because it signifies that you have quite a bit left over for dealing with a rainy day.

Living beneath your means may not sound like a whole lot of fun. It sounds as though a person doing this is stuffing coffee cans full of dollar bills into spaces in the walls, darning socks until they simply can’t withstand another repair, and eating cold beans in a darkened room.

In reality, it isn’t like that at all.

Learning to live beneath your means can bring you a kind of peace that you never felt before. It can help you survive financial crunches both large and small. It can teach you to take joy in simpler things instead of always looking for the next thing that will give you a surge of happiness.

Some folks are already great at this. It may be elementary to you. Hang in there because there are graduate-level frugality ideas on the way. We’re starting off with the fundamentals and will move on toward high-level, Ph.D. thrift from there.

Others have gotten themselves into a pickle and want to figure out a way to get out of it. Some have cut down to the bare bones and are still having trouble. (If you are not making enough money to pay your bills, this article may help.)

But how do you go from a lifestyle in which every dime goes out to one in which there’s money left over each month? Here are some tips to help you make the transition to a more peaceful financial lifestyle. Many of these tips will work even if you’ve already begun having financial problems, but a few are preventative measures that are geared toward making a lifestyle change when you aren’t yet under the gun.

1.) Assess your budget.

The first thing you have to do is get a clear picture of what money goes out each month. If you use a debit card for everything, this is incredibly easy. If you use cash or a combination, you’ll need to spend at least a month taking notes of where your money is going.

Print out your records for the past 2-3 months. Then, plug the numbers into a spreadsheet. This article has 10 different styles of budget spreadsheets that are free. Pick the one that looks like it will work best for you. (Not the debt reduction one, though – save that for later.)

Once this is done, you’ll have a clear picture of where your money is going. This can be a painful step, but it’s essential. (This article is a good one if your frugal living budget may have gone awry.)

2.) Calculate your fixed expenses.

Your fixed expenses are the baseline of your budget. These are the expenditures that don’t (for most people) change from month to month. They are bills like car payments, rent/mortgage, insurance, gym memberships, cell phone bills, cable/internet …you get the idea. You may not have all of these bills – it not, that’s great. If so, you may want to make some adjustments.

You need to know this magic number to set your budget. This number may not be final, as we’ll discuss below, but it is important to know, if you lost your job right this minute, how much your output would be.

3.) What are your bad habits?

After you plug in your numbers and you can see them there in black and white, it’s time for a grim dose of reality. What you’re taking a look at first are those little random expenditures that siphon away money subtly. The $5 here and $10 there.

You may discover that you spend $300-400 each month for a daily lunch out that didn’t seem like much in individual increments, but when you add the daily $5 drive-thru coffees and an afternoon bottle of water, ends up exceeding $500 a month. Half a thousand. Lotsa money.

Maybe you smoke or drink alcohol outside the home on a regular basis. Do what you’re going to do – I’m not here to tell you to stop smoking or drinking –  but look at how much you’re spending to do it. Maybe you buy a giant soda pop out every day for a couple of dollars. That adds up, too.

Nearly everyone discovers that they have at least one bad spending habit in this part. Don’t beat yourself up. Just fix it. Imagine what your life would be like with the money you blow on cigarettes, drive-thru coffee, giant fountain sodas, and happy hour tucked away waiting to help you through an emergency.

Unless you give up some of your bad spending habits and replace them with something more fiscally responsible, it’s going to be tough to live beneath your means.

Daisy Luther
Daisy Luther lives in a small village in the Pacific Northwestern area of the United States. She is the author of The Organic Canner and The Pantry Primer: How to Build a One Year Food Supply in Three Months.

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