How to Live Below Your Means when Money Is Tight

the words living below your means kinda sounds like a drag so why do we think you should do it in this video we'll talk about what living below your means means and what it does not mean and if you're ready to get started we'll give you some steps that you can take to live below your means and we'll use an example from our real life to help you out but if you don't know us I'm hope and I'm Larry and this is under the median where every week we talk about practical frugality we really like definitions when we talk about a topic we like to make sure that we're all approaching it from the same Viewpoint so what does living below your means really mean well it really means having money left over after you've paid out all of your expenses living below your means is a conscious decision you choose to spend less than you make it makes sure that all of your outgoing expenses are less than your incoming money now in short living below your means means less stress it means that you can relax knowing that you have enough income to cover all of your expenses and to have money left over and we're going to give you some ideas of what you might want to do with that money that's left over but what does living below your means not mean well it does not mean that you're going to live like a pulper and it does not mean that you are poor a lot of rich people actually deliberately live beneath their means it doesn't mean that you're not going to have any more fun and it doesn't mean that you have to stop and join life so how does living below your means actually work in real life to illustrate what living below your means can mean to you we'll actually share a story from our life in 2008 on a really nice sunshiny fall day our children were playing Outdoors it was about 3 30 in the afternoon they had just walked inside the house and as soon as their foot like hit that vestibule walking into the house someone ran through our front yard now they were closely followed by police officers we later found out that they were drug dealer who was dealing drugs at three o'clock in the afternoon at the city park two blocks from our house and that was when we had an epiphany and Larry said we need to get out of Dodge now we actually owned our home we had paid off the mortgage within five years of purchasing the home so we did have some money there we had some money saved up that we'd already been squirreling away to move to a larger home and we also had just a little bit of inheritance that we had set aside from Larry's dad so that's what we had available but we realized that in order to move and really live within our means easily we wanted to purchase that next house with cash so we set a goal for ourselves to save thirty thousand dollars within 24 months now bear in mind that his salary at the time without overtime just basic salary was about forty thousand dollars so we'll share with you how we saved 37 percent of his take-home pay and what we did to supplement that over the next 20 months and order to save that thirty thousand dollars to pay cash for this house now that is the epitome of living beneath your means now we recognize that what we're about to share with you is actually an extreme we lived below below our means yes and we knew that we were doing it in order to reach a great big goal and reach it quickly but all of the steps that we took you can actually use in your own life in order to live deliberately beneath your means what helped us in this project was that we knew that this was going to be a short-term measure it wasn't going to be permanent our Extreme Measures were only going to last maybe two to three years so we were okay with living like this in order to meet a really huge big goal now the other thing you need to understand is that we were already living below our means we were already saving money every single month so some of the things we'll share we were doing it's just that we sort of hypercharged them Turbo Charge them if you will and gave them a little push in the direction that we knew that we needed to do and if you're questioning whether we still live below our means we absolutely do well let's take a look at some of the steps we actually took in order to meet this really huge goal in fact I actually thought it maybe was a little bit of an impossible goal to pay cash for our next house but the first thing we had to do in order to really live below our means was to establish a why why were we doing this now this is just kind of a sneaky way guys of us sharing with you that you need to know your goals really that's a nice way of saying your why here's why you have to have a why because for us it was an obvious why we felt like the neighborhood was definitely degenerating it was going downhill it was in a position where we didn't know how much longer our children were still going to be safe living there we had a huge why but in order for you yourself to live beneath your means you need to understand why it is you're doing it because anytime you just arbitrarily start starving yourself for instance when you're on a diet if you're just starving starving starving starving starving yourself and there's no end in sight well then you're not going to keep doing it and the same way with saving money if you're going to live beneath your means you need to have some goals concrete goals that you are working towards goals give us motivation in order to do it and keep up with it because we're not going to lie to you this whole business of living beneath your means living under your means living unless then you make however you want to put it it's not always going to be easy there are going to be days when you just want to throw up your hands and say forget about it forget about I'm not going to keep living this way anymore and when you are able to have a concrete written list of goals you can get those out and look at them and remind yourself this is why I am doing what I am doing tell us what your goals are or is it to pay off credit card debt is it to pay off your mortgage is it to save for retirement those are your whys tell us about your whys in the comments section you have to have goals in order to keep you on track you know a train stays on a track because the wheels are designed to stay on that track without which it won't do so so a goal will help you do that and it's always good sometimes to have someone along the line with some experience to help you out now there's actually someone who has helped to keep us on track for a number of years John kriegmer and the team at creekmur wealth advisors they are our partners for this video I actually just got an email from John today we got an email he sends it out every two weeks and he does something called a deep dive it's a 20 or 25 minute video now today's video actually had four really really cool charts that were available for me to look at which made me super duper happy but the neat thing about these videos is the fact that he takes that time and sort of answers in depth some questions that he may have received about budgeting or about saving money or about investing or about retirement and what that allows us to do is to feel like we're really up to date with what's going on and also it lets us know maybe there are some questions that it raises that we want to make sure that we contact John and ask for further clarification John and the staff at Creekmore well advisors have always been super duper available to answer any questions that we've had now if you'd like to get on that newsletter list it's a bi-weekly newsletter there's a link all the way at the top of the description of this video you can also use that same link if you already know you have some questions for John and you'd like him to give you some help now you do need to live in the fifth United States for John to help you but he's super happy to field any questions that you might have thanks John and Creekmore wealth advisors for sponsoring the video well I hope you just got done using a word that relates to our next step in how we live below our means and that word is budget one of the first things we did after we figured out our why was to take a really really critical look at our written budget now you notice I said written budget because if the budget's up here and it's not down on here then it's not actually a budget folks you need to have your budget written down and because you need to put that in front of your face on a weekly basis so that you can see how you're progressing on the budget and whether you're staying on budget or not but the first thing we looked at is what Larry and I like to call our BBB that is our Bare Bones budget now your bare bones budget is what you need to have in order to sustain yourself so you need clothing on your back you need food in your stomach you need a roof over your head and you needed transportation to get from point A to point B that is your bare bones budget that's the first thing we looked at now not to say that we didn't look critically that and decide whether we could lower those amounts or not but the first thing you want to do when it comes to living under your means is to make sure that your basic needs are being met now if you don't have a budget hope and I recently did a video on a four-step process to laying out a budget and this process should only take you about 30 minutes we'll leave a link up here in this video and down in the description so you can watch that the next step that we took in trying to live below our means and remember we're really kind of talking about an extreme measure you can apply these to just living below your means as well the next step was we decided to plug the holes now what do we mean by plugging the holes that sounds like we're on a sinking ship or something I hope not well what that really means is and anytime you have a budget there are places that you are over spending money or unnecessarily spending money even if you believe in your heart that you have done everything you possibly possibly can in order to spend the minimum amount of money that you need to spend every month all of us Larry and I included have gone through pair periods of time when we have looked critically at our budget and said you know what we're spending that money and we really don't need to be spending it so we looked at every single facet of our budget and decided where are there some holes that we can immediately plug things that we can stop doing that we knew would immediately save us money because I am a girl who likes to see instant satisfaction I like instant gratification and if we were going to embark on this big goal I wanted to make sure that I could see progress like right away so what you want to do here is look at areas that you're spending money on in your budget that you don't really have to spend money on maybe that might be going out to eat maybe that's alcohol in cigarettes think about things you absolutely don't have to have in order to live these are things that you can take out of your budget put that money back in in order to have a surplus so basically you're going to pull the plug on those items so that you can use those items in order to plug the holes that are in your budget oh I like that thank you now there's one other thing that you really should be avoiding and it should go without saying that you want to avoid impulse spending so while you're fixing those immediate holes in your budget you might want to think about looking at some of the emails that are coming into your email inbox yeah I'm talking about Wayfair yeah I'm talking about the book club that you belong to I'm talking about those things that come into your box and say spend money spend money spend money because you might want to just unsubscribe to those no don't worry if you decide to resubscribe later they are going to welcome you back with open arms when you feel like you're going to be able to get those emails and not be tempted to hit that big red buy button but right now you are focusing on making sure deliberately that more money is coming in than is going out you know Amazon sends me emails uh every week that suggests things that they think I should buy from Amazon I literally just delete them the next thing that we did is kind of one of Hope's very favorite things in fact she came up with this idea we call it the 10 challenge this if you've ever watched this and heard us talk about the 10 talents this moment in our life was the birthplace of the 10 challenge Larry said get the budget after we had plugged immediate holes that we knew that we could stop spending money on he said get the budget and I said there is not a whole lot that we can cut and he looked at me and he said I don't care if we pay for this new house with nickels and dimes we will pay for this new house get the budget so we instituted what became known as the 10 percent challenge to do the 10 challenge you get your budget just like we did you lay it out in front of you and you challenge yourself in 20 minutes set the timer and you and your partner go through each of those budget areas and you come up with ideas for how you will cut each of those budget categories by 10 you will be absolutely astounded at how much money you can save we had a viewer that did that they saved over a thousand dollars in one year just by going through it 20 minutes doing the 10 Challenge and if I recall we saved several hundred dollars a month by doing that so and we did meet our goal within two years we were able to pay cash for our next home and remember this is a budget guys and this is why we tell you this this is a budget that I was absolutely positively convinced that we would not be able to find any more than 50 bucks that we could save and by the time we'd done this challenge we went through and said nope there was more money there to save than we thought there was I basically hope said I'll never forget this if if we can't eat it we're not buying it that was pretty much what it was now if you want to get a look at some of the things we did to cut our expenses we wrote an e-book on it it's called 10 ways to radically reduce your expenses it is free there'll be a link in the video description to request this ebook fifth thing that we did in order to live under our means and that was that we tracked our spending you you have to know where your money is going and the only way you're going to know where it's going is if you track it one thing it's kind of an easy way to track it is any receipt that you get from the time that you're going to start tracking get a little cardboard box and as you bring home receipts just start putting it in the box and after a month go through and look over those receipts and do a thorough investigation of where your money is going once you figure out where your money is going then it's really easy to make some decisions on whether it should have gone there or not we knew exactly what that concrete goal was we knew what the target was to how much money we needed to save every single month at the end of every month we could tell you pretty close to the penny exactly how much money we saved and how much further we needed to go in order to meet the goal keeping your goals in front of you guys I'll say it like a million times if you will write those goals down put them in front of your face and track your progress on those goals you have a much greater percentage chance of reaching those goals than if you don't take those simple steps let's go to the next step that we put in place in order to live below your means and that is if you make more money that means if you get a raise you get a bonus then put that towards savings don't just absorb that into your budget or say well now we can spend some money on some fun stuff we can buy that pool table that's called lifestyle creep guys what happens is we get a raise or we get a second job or we get a bonus anyway money is coming in that we weren't expecting and our expenses tend to grow in direct correlation to that extra money so you find yourself two three four years down the road making more money but not saving more money but if you'll stay on that same budget that you're on and make sure that all that extra money is being put toward future goals then you're going to be consistently living below your means now this kind of goes along with that thought when you're talking about say savings you need to be deliberate about it and you need to put savings as a part of your plan off of the top not just to look at what's kind of left over and then put that in savings you need you need to make a deliberate measure to put money towards savings here's another tip for you automate some banks and Credit Unions will allow you to automatically deposit money and not only that they will take that automatic deposit and they will divide it automatically into different accounts for you so you can have multiple accounts under your name at the same bank or credit union now not all banks or credit unions do this so you need to check with your bank or credit union but if your bank or credit union does not do that you'll need to be responsible for doing it on paper and making certain that you know how much money is set aside for each future goal because otherwise it will be as we've said in the past one great big green pile of cash and you'll wind up spending it thinking that it's free money to spend and it's actually not now let's say you've looked over your budget and you've looked over your income and you don't have enough income to meet your basic needs this is a time when you need to think about making more money that might involve doing side gigs it might involve selling things that you have in your house we have a lot of avenues online where we can list things and sell them it might mean you might need to start looking for another job if it's kind of a major increase that you're needing Larry also sold items from our house that he did not anymore need or that we didn't need any longer I should say not he we did not need any longer we sold those items Larry also took every bit of overtime that was offered to him now the difference that it made between us meeting our goal and not meeting our goal was that of several thousand dollars in one year so it was actually quite a bit of extra income we were able to bring in just by focusing on what can I do that's going to bring in more money hope did some side jobs she did some voicing for a local radio station and uh a business that I used to work at hired her to do some voicing and I did some odd jobs some transferring of old cassette tapes and and eight millimeter films for people there's all kinds of things that you can do use your imagination and get those wheels turning another thing that sometimes we don't think about is paying cash for items that we buy you know when you pay cash you actually feel that money going away there's a real sense of loss of that money when you're giving it out and it kind of keeps us from spending too much when you pay with cash you can only pay with as much money as you have on hand then again there's another way you can do this with the envelope system where you actually put it in envelopes or when the envelope is empty you stop spending it's an easy way to track and regulate what you're spending now we would be the first to admit that this is getting harder and harder to do not because cash is hard to come by but it's hard to find places to spend funded any longer because a lot of places are going cashless and they're saying you have to be using debit cards or credit cards in order to shop here which is very sad but there are still plenty of places available that will take your cold hard cash and if you absolutely can't find a way to do it then you need to do what we've suggested earlier and that is you have to track it on paper no matter how you do it if you don't have that cash in hand you have to act as though you do have that cash in hand and at the end of every day you have to make an accounting you start with a certain amount at the top of that ledger sheet in that column let's say that it's groceries and as you spend if you have no option but to scan your debit card or your credit card then you are going to make certain that you are subtracting it by hand every single night at the end of the night and when you get down to zero you're done shopping before we go out grocery shopping especially during this critical time in our lives I would ask Hope how much do we have left this month in our grocery budget she would give me that amount and then we would fix that in our mind let's say we had fifty dollars left when we went to the store we would go around we would look for the items that we had on a list and as we put those items in the cart we would subtract it from 50. so we knew exactly how much we had left it was a great way to track our money now to just give you an example of how this even works today in our lives I don't think we've even mentioned it on the channel uh we we will go in probably April back to the Amish store and buy some bulk food we haven't been since I think November actually August August so it's dead quite some time since we've been there and I told Larry I said what I want to do is to save up some money in order to do that without busting the grocery budget to Pieces so for January February March and April we are spending no more than one hundred dollars a month on groceries to feed our family we do have a lot of stuff back in the pantry and we've got a full freezer so that is where I'm consistently needing to pull food from right now in order to not go over that 100 but what he just mentioned about tracking every single grocery expense so I know how much I have left before I head out to the grocery store that's what I've been doing for the past two months another tip that we'd like to give you is to reduce your regular spending now what I just shared with you is kind of an example of that we are artificially reducing our regular spending for a period of time in order to reach a goal to be able to buy some bulk food without blowing out the grocery budget but you can use that same idea of reducing regular spending in nearly any category of your budget find a way to get what you need for what you're willing to pay call your internet company and ask if they have a package that costs less than what you are currently paying for switch to Mint mobile we've had mint mobile for several months now great service and we love mobile 15 a month guys there are a lot of ways that you can actually reduce your monthly bills and you just don't think about it in fact we did a whole video and we gave you a step-by-step procedures on what to do and how to reduce your monthly bills we'll make sure that that video is listed in the description of this video but let's touch on just a few more wait for items to go on sale this takes a little discipline it means that you're gonna have to delay your gratification on getting that item to in order to wait for that you also might look at items that are on clearance but you want to be careful with that make sure it's an item that's on your list and something you're already planning on buying and the other thing as we mentioned we're going to Amish Country in order to buy in bulk we save a lot of money by buying 50 pound bags of oatmeal rolled oats and cream of wheat in 50 pound bags I mean it's amazing what we end up paying per pound for these items by doing this but we will caution you buying in bulk is not always the best deal so before you do it make sure you do the math a few other ways that you can reduce those regular expenses one of them is to barter things that you've previously been paying for see if you can't barter to get them you'll also want to focus on free forms of recreation and fun there's so many things that we can do that just don't cost a lot of money look for those things and save that money in short there is no magic formula to live beneath your means it takes determination and it takes you deciding I'm going to do it it doesn't happen automatically it's hard work and you have to work at it very deliberately but let me tell you the payoff is wonderful now now remember once again if you want to know in depth the things that we cut in order to reach great big goals on a low income then be sure to request that free ebook there'll be a link to it in the description of this video if living below your means makes sense to you and you want to do that but you haven't set up your budget yet we have a video that we mentioned earlier that we did the four-step process to setting up a budget it doesn't take that long it's just a matter of drilling down and doing it we'll leave a link to that video right over there or being poor that was my line well you drew my line so I took your line well what's fair is fair I'm sorry you steal for me I steal from you I mean what the heck kind of logic is that Karma there's no more [Music]

Channel: Under the Median

Views: 279,394

Keywords: frugal living, frugal living tips, frugal living to save money, how to live below your means, how to live within your means, how to save money, how to save money with low income, live below your means, living below your means, living below your means to save money, living frugal, money saving tips, save money, how to live below your means when money is tight, under the median, hope and larry, tight money saving tips

Id: nVjqco6CWzA

Length: 25min 59sec (1559 seconds)

Published: Fri Feb 24 2023