Living beyond your means

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Americans in general have come to accept living beyond their means as normal behavior. What do I mesn by this? Where where should I begin? So many of your neighbors, even the ones living in mcmansions who appear to be affluent and carefree are living paycheck to paycheck, have thousands and thousands in credit and auto debt and lack any real ownership of property. Im going to make some statements here that may seem backwards, but consider that society conditions you to be a consumer above all else: --Eliminate all debt systematically, beginning with high interest credit card balances. --Forget the car payments! Buy used and pay cash. This is difficult for car people like us But it is vital. Dont worry about what strangers think of your possessions. --use savings from above to save money for emergencies --once above is accomplished, invest money and pay down mortgage as fast as possible. Why am i being so preachy? Because this way of life will be so much less stressful, and you will end up
 

Clubber_Lang

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(Continued) actually owning and not renting your lifestyle. Put yourself in a position to be able to give to charity and not be a charity case. Dave Ramsey is an excellent resource. Think this is nonsense? Before the popularity of credit, at the turn of last century people could save up and pay cash for a modest house! Think.about that for a minute! Credit and financing have driven up the price of cars and homes. This trend has consistently led to effectively renting all material things. Dont fall into the trap! Dont be a hamster on a wheel.
 
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968
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Battle Creek, MI
I wouldn't start with the high interest payments first. I would start with the lowest balance first because debt payments are all emotional. If you have these small little victorys that will keep you motivated to keep living on nothing and tackle the larger debts. If I started with the mortgage as my first goal then the cars and credit cards, I will never see the light at the end of the tunnel. Remember if it was all math related most people wouldn't in the situation that they are in. I would also have emergency money stashed away first above all else because what do you do when an emergency occurs before you saved any money from early payments?
 
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One Step Beyond
I agree completely. Besides B.I.T.O.G. web-site, Everyday I also go to Bogleheads.org John Bogle was the Founder of Vanguard Mutual Funds. The bogleheads are people who invest with the philosophy of: 1) Low Cost Management Fees 2) No Commissions 3) Well Diversfied 4) Index Funds People everyday are firing their Financial Advisers and taking the simple approach to investing.
 
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I remeber a story some years ago in the press where they interviewed people who had a real net worth over $1,000,000. The characteristics always stuck in my mind and some are as follows: 1. Lived in a more modest house that was paid for. 2. Had almost NO electronic subscriptions. No cable TV, cell phone at a minimum, etc. 3. Paid off credit cards in full each month, ie they treated it as they would their checkbook and only used it for things they could pay for. 4. Many had older cars and kept them an avarage of ten years or more. 5. Debt payment on mortgage was religious and mortgages were typically paid off in under 10 years. Means all available cash was used to do this for a time. 6. Took as much advantage as they could of 401k, IRA, etc. 7. Rarely went out to eat. By the time these folks were at 50 years old, they were debt free and worth over a million dollars or more.
 
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My former neighbor is one of those guys....zero debt, modest home, always used cars....age 52 just got diagnosed with stage 4 cancer. Doc says he has until Thanksgiving...maybe. shrug My other buddy lives on his MasterCard, big home, always a new Lexus for the wife, smokes, drinks, has boats and 2 vacations every year. zero money in savings....he will live to be 90. shrug Who's right???
 
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Originally Posted By: Clubber_Lang
Think this is nonsense?
I'll get on the losing side of this thread early. Yes, IMO, in part nonsense. Don't lose sight of the opportunity cost of your actions. Great to pay off debt, what else could you be doing with your money? Make some distinction between living beyond one's means and reasonably leveraging one's situation.
 
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968
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Battle Creek, MI
Originally Posted By: Doog
My former neighbor is one of those guys....zero debt, modest home, always used cars....age 52 just got diagnosed with stage 4 cancer. Doc says he has until Thanksgiving...maybe. shrug My other buddy lives on his MasterCard, big home, always a new Lexus for the wife, smokes, drinks, has boats and 2 vacations every year. zero money in savings....he will live to be 90. shrug Who's right???
With a sample size of 2 not a very accurate method of looking at things. I refer to the old saying "I rather have it and not need it than need it and not have it." I rather have a fat bank account in hopes that I live a long time.
 

Clubber_Lang

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My former neighbor is one of those guys....zero debt, modest home, always used cars....age 52 just got diagnosed with stage 4 cancer. Doc says he has until Thanksgiving...maybe. shrug My other buddy lives on his MasterCard, big home, always a new Lexus for the wife, smokes, drinks, has boats and 2 vacations every year. zero money in savings....he will live to be 90. shrug bad luck with your health is awful, but consider this: when your Irresponsible friend is 70, too old to work he will have to work anyway Because he was so impulsive. Or we all will have to pay for him, which Is a bunch of %$#&. A topic im not getting into. Btw, im going to pay Cash for an older, small boat that will seat 4. Bet i can find an awesome Mckee craft 14 footer that will do 35mph for $1500. Not the $15000 most Would finance. You can do what you want on a budget within reason. Who's right???
 
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Originally Posted By: SVTCobra
Originally Posted By: Doog
My former neighbor is one of those guys....zero debt, modest home, always used cars....age 52 just got diagnosed with stage 4 cancer. Doc says he has until Thanksgiving...maybe. shrug My other buddy lives on his MasterCard, big home, always a new Lexus for the wife, smokes, drinks, has boats and 2 vacations every year. zero money in savings....he will live to be 90. shrug Who's right???
With a sample size of 2 not a very accurate method of looking at things. I refer to the old saying "I rather have it and not need it than need it and not have it." I rather have a fat bank account in hopes that I live a long time.
Sample size? My buddy who has cancer is now taking a vacation trip to the keys that he "always wanted to take" but didn't want to spend the money.
 
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659
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MEMPHIS, TN
Originally Posted By: dparm
Why is everyone so quick to shun the use of credit? It is actually a good thing in some instances.
I think it's touching base in excessive use of credit and over extending your money.
 
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6,170
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North Coast
Originally Posted By: Clubber_Lang
My former neighbor is one of those guys....zero debt, modest home, always used cars....age 52 just got diagnosed with stage 4 cancer. Doc says he has until Thanksgiving...maybe. shrug My other buddy lives on his MasterCard, big home, always a new Lexus for the wife, smokes, drinks, has boats and 2 vacations every year. zero money in savings....he will live to be 90. shrug bad luck with your health is awful, but consider this: when your Irresponsible friend is 70, too old to work he will have to work anyway Because he was so impulsive. Or we all will have to pay for him, which Is a bunch of %$#&. A topic im not getting into. Btw, im going to pay Cash for an older, small boat that will seat 4. Bet i can find an awesome Mckee craft 14 footer that will do 35mph for $1500. Not the $15000 most Would finance. You can do what you want on a budget within reason. Who's right???
Who's right? I have no idea....wish I did. Coffee2
 
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13,616
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Frisco, TX
Originally Posted By: CHARLIEBRONSON21
Originally Posted By: dparm
Why is everyone so quick to shun the use of credit? It is actually a good thing in some instances.
I think it's touching base in excessive use of credit and over extending your money.
Well, OP said cars should be paid for in cash. You'll struggle to get a mortgage for a house, or any other line of credit, without a credit history. That's why they tell people to get at least 1 credit card and just keep paying it off every month. Prove you are a trustworthy individual. Frankly I don't understand this thread.
 
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15,862
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NE,Ohio
you can finance cars usually 0 to 2.9% interest. a mortgage should be under 5% by high interest its percentage not total $$$ interest usually CC's first then other high interest % unless you financed your house with a CC that would be last on the list or close.
Originally Posted By: SVTCobra
I wouldn't start with the high interest payments first. I would start with the lowest balance first because debt payments are all emotional. If you have these small little victorys that will keep you motivated to keep living on nothing and tackle the larger debts. If I started with the mortgage as my first goal then the cars and credit cards, I will never see the light at the end of the tunnel. Remember if it was all math related most people wouldn't in the situation that they are in. I would also have emergency money stashed away first above all else because what do you do when an emergency occurs before you saved any money from early payments?
 
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