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Living within your means is a loaded statement in the sense that, as a matter of logic, you can't live beyond your means because it's beyond your means to do it. It's a paradox.
So when people talk about living within your means, what they're really talking about is maintaining a standard of living that promotes prosperity rather than a standard of living that encourages debt or is otherwise detrimental to your financial gain.
It's sound advice that I wholeheartedly agree with, but people have a funny way of taking sound advice and twisting it to fit their bias, turning it into meaningless garbage. That makes it necessary to examine it.
The standard of living that promotes prosperity is relative and not just due to things like cost of living. The problem is that some people - usually the ones who mindlessly bark this phrase at everyone - think that their standard of living is the benchmark for everyone else's.
They tell you what you should consider adequate living arrangements, how much you should eat and of what, how much you should spend on clothing and the like. They tell you how much money you should have going out and on what, not based on your means, but based on their values.
For reasons both spiritual and intellectual, I don't require a lot of material things and the luxuries the average American enjoys, I'm just as happy going without. So I'm capable of living off far less than most of my friends.
If life were only about money, I would say that they're being wasteful, that if they would just live within their means, they'd have more of the things they want, they'd be more successful, they wouldn't have so much debt. I'd say that I spend a fraction of what they do and look at me! I'm not dead. I have a roof over my head and I'm happy!
But I know life isn't just about money. There are all kinds of "means" that impact our standard of living. Emotional, physical, ideological.
People may not think of it this way and it can seem confusing to put it in this context, but these things are a different kind of limited resource and they matter because you can't separate standard of living from quality of life. Not everyone can experience the same quality of life at the same standard of living.
I have the spiritual means to experience a higher quality of life with what little I have than my aforementioned friends can. They're living within their emotional means or ideological means - the minimum they can live with and not be absolutely miserable or not feel unaccomplished or whatever else - which just happens to require spending more than I do.
And I'm not talking about superficial nonsense like needing a stainless steel appliance. I'm talking about the values we have that dictate how we want to live, how we feel we deserve to live, how we can live without falling apart. The aspirations we have for ourselves and for our loved ones.
Maybe for Joe Shmoe, going to college is a terrible idea financially and will do nothing but land him in debt but maybe Joe chooses to do it anyway because it's something he needs to achieve the quality of life, the standard of living he requires. Maybe he's living within his means a different way.
People may scoff at that, but it's everything to understand that relativity - that it isn't just about numbers on a piece of paper.
My point is that where people go wrong is not taking the time to sit someone down and say, what is it you want out of life? What is it you need out of life? Now let's look at how your spending habits and your financial decisions may be negatively affecting that. Let's look at how you can adjust your standard of living without compromising your quality of life.
Instead, they just lump everyone together in a pile and say, "You're not rich because you suck." That's what makes the phrase loaded. Because the people who stomp around saying it don't know anything about you at all and why bother learning when it's so much easier to assume that if you aren't where you want to be financially, it's because you throw money away trying to be what you're not?
Quote:
Originally Posted by StarPaladin
"Live within your means" as a phrase and as a popular figure of speech, would seem to be self-evident and obvious, at least on the surface. Simply put, it might represent not spending what you don't have. However -- and this is a big "but" -- it can also get incredibly frustrating to have people automatically parroting this phrase, for several reasons. First, the "means" with which one lives has gone down, not up, over the past 30+ years, with wages not being fairly-adjusted to inflation. What this means on a practical level, is that with the varying levels of inflation and deflation of the dollar over the past few decades, people's standards of living have gone down, not up. It was much easier to "live within one's means" in 1950, 1960, and 1970, than it was was say from 1980 - present. Houses that could once be bought decades ago on a single-income family salary for $25,000 may now, in 2015, cost as much as $750,000+, in certain residential areas. This is an extreme example where it is obvious that the financial industry has "moved the goal posts" of what living within one's means represents today in 2015, vs. what it used to mean.
While observing some degree of "living within one's means" would actually seem prudent and even wise, it almost sounds like some people may take it to drastic extremes, where it is used as a justification for endorsing the gradual (and involuntary) reduction of people's living standards, over time. While also serving as an apologist of sorts to the well-off, well-to-do, and the wealthy. Keeping in mind that it is much, much easier to live within one's means, so to speak, if one is already well-off in the first place.
Just mortgage, i said somewhere about paying fees on heloc if you could. So someone with $500 extra could invest it plus rent or mortgage plus heloc fees.
Either they have the HELOC debt (in which case the total payments exceed the $1000 rent) or there is no HELOC debt (in which case you have an opportunity cost).
You can't have no heloc payments and also no opportunity cost - in other words, you can't have your cake and eat it too.
Just try living beyond your means and see what happens after a few years.
Then you'll drop the nonsensically applied "loaded" adjective and replace it with
"wise"
I don't disagree with the fact that living beyond your means is, in theory, an overall undesirable thing. Where I differ in my view is that the average means were much more favorable for the average wage earner, in previous decades, vs. today in 2015 when the U.S. dollar is worth much less it used to be, in inflation-adjusted terms. Why should a person be expected to live within 2015 means when 1950 means were so much better and so much more in their financial interest?
"Live within your means" as a phrase and as a popular figure of speech, would seem to be self-evident and obvious, at least on the surface. Simply put, it might represent not spending what you don't have. However -- and this is a big "but" -- it can also get incredibly frustrating to have people automatically parroting this phrase, for several reasons. First, the "means" with which one lives has gone down, not up, over the past 30+ years, with wages not being fairly-adjusted to inflation. What this means on a practical level, is that with the varying levels of inflation and deflation of the dollar over the past few decades, people's standards of living have gone down, not up. It was much easier to "live within one's means" in 1950, 1960, and 1970, than it was was say from 1980 - present. Houses that could once be bought decades ago on a single-income family salary for $25,000 may now, in 2015, cost as much as $750,000+, in certain residential areas. This is an extreme example where it is obvious that the financial industry has "moved the goal posts" of what living within one's means represents today in 2015, vs. what it used to mean.
While observing some degree of "living within one's means" would actually seem prudent and even wise, it almost sounds like some people may take it to drastic extremes, where it is used as a justification for endorsing the gradual (and involuntary) reduction of people's living standards, over time. While also serving as an apologist of sorts to the well-off, well-to-do, and the wealthy. Keeping in mind that it is much, much easier to live within one's means, so to speak, if one is already well-off in the first place.
I disagree. People's standards of living have changed drastically. My grandparents earned very little and yet managed to save to put their kids through school and for retirement, but they prioritized their spending and managed to do without a lot of the things that they wanted. Of course, they didn't spend money on cable TV, internet, or cell phones, which currently eats up a huge portion of discretionary income these days. They also rarely ate out. Home size has also drastically changed for the average American - look at the McMansion phenomenon that helped send us into the last recession. People decided it was more important to buy huge homes to impress people than to put that money towards retirement or their kids' college savings plans. Instead, they bought huge homes to furnish, heat, cool, and maintain. HUGE expense there!
What about TVs? People tend to have multiple flat screen TVs through their homes. Think that's cheap? Or manicures and pedicures? Or highlights? Women today spend much more on appearances. How about the gas guzzlers we drive? People didn't always drive such enormous vehicles. How many CDs or DVDs to you own? What about gadgets like iPads, Kindles, etc.? All these items didn't exist in the '50s, 60s, and 70s, so now that they do, everyone expects to have one. Modern American life is designed to drain your pockets. Look at the food prices for packaged/processed foods - foods that were created for working families. I can eat much healthier and cheaper when I make my own food instead of buying that garbage.
It's important to look at the whole picture when making a statement as loaded as the one you posed. The story is in the details. Then again, there have always been people who have lived beyond their means and never saved, regardless of era and income. Hearing my grandparents' stories have taught me that and reading centuries of literature have taught me that.
Oh, and by the way, I can speak from experience too. I earned very little while living in NYC and made many, many sacrifices in order to save to put myself through school and buy a home. It wasn't easy and it certainly wasn't fun, but I did it and watched as all my friends and even non-friends spent like there was no tomorrow. While I own a nice home and have a nice retirement account, they owe a lot of credit card debt and have nothing to show for all the hours they've worked. There is much to be said for living BELOW one's means.
seem like they are still good to me. What's your point? Just because more people are working the same min-wage jobs, doesn't mean that the non-min-wage jobs aren't good. It's a job issue more than a wage issue really. Too many people on the low end, not like the wage ladder got it's top cropped off, it's just that people aren't stepping up the ladder. Raising min-wages just puts a rock under the ladder to make it higher off the ground, it doesn't put the rungs back in place for people to move up. To put the rungs back, they need to learn new sets of skills to either build their own ladder or find someone that wants to use their skills as a rung for the company.
a $15/hr min-wage doesn't actually move them out of poverty if that becomes the norm, it just moves current $15/hr workers into the group of min-workers and you have a bigger group of minimum wage workers. It doesn't solve anything on how they will move up in their career.
What in the world are you talking about? I never even mentioned minimum wage.
'Wages' in the general sense have collapsed. For everyone.
I agree with katy. Learn to live below your means. Okay, next to impossible when you're minimum wage. I've gone from minimum wage, to middle, to high. I didn't save much but didn't spend more than I made when I was earning minimum wage. I learned good habits then and now I save/invest 75% of what I earn.
In MHO, Keynes was 100% right, and Thatcher was wrong. One hypothetical that might be worth mentioning: if the Vietnam conflict had never happened and had never occurred, would neoliberalism (as described in the cited article above) have been a runaway success, instead of being considered as unsuccessful? And without a Vietnam event happening, could the Stagflation of the 1970's have been entirely averted?
ETA: according to at least some economists, if the U.S. dollar had actually been truly and fairly-adjusted for inflation since the 1970's, the minimum wage would have been as high as $30 - $35 an hour today...just some food for thought...
I'm not convinced that the CPI is that inaccurate or unrepresentative.
I don't disagree with the fact that living beyond your means is, in theory, an overall undesirable thing. Where I differ in my view is that the average means were much more favorable for the average wage earner, in previous decades, vs. today in 2015 when the U.S. dollar is worth much less it used to be, in inflation-adjusted terms. Why should a person be expected to live within 2015 means when 1950 means were so much better and so much more in their financial interest?
Because it's 2015 and not 1950, and trying to pretend it is not is not helpful. If the average means has gone down, the average standard of living must go down, too, no matter how much we may not like it. Ultimately a person can't spend more then they earn indefinitely.
(As to why it's gone down: that's a good subject for discussion. The short and dirty answer is that globalization is leading to a leveling of opportunity and of living standards. This sucks if you live in a wealthy country like the US, but is wonderful if you live elsewhere. 1950s living standards in the USA may have been great, but not if you were unlucky enough to be born in India or Africa.)
Figure 1 shows it has been $13.50 - $15.00 per hour for decades. Yes, it has fluctuated, by this is a range of only a few percent. Not a collapse.
And no, housing has not been as affordable as you suggest. Many that were living with no roommates couldn't really afford it (they were not saving for retirement or had no emergency fund).
They have collapsed.
It's a relative collapse that cannot be measured accurately through a circumscribed methodology of fake data (like what the US government says is the rate of inflation, for example).
However, the collapse of wages becomes glaringly obvious when measured comparatively against the rise in costs of healthcare, college, tax, energy, food, insurance, transportation, daycare, et al.
You know, the stuff that most people can't do without without risking homelessness, illness, death, etc....
The stuff that can't be budgeted away even if in some cases they can be somewhat mitigated (read: roommates).
I think it's your pride keeping you from seeing the truth. It seems to me that you would rather feel superior to others that haven't been as lucky as you have than to see the truth.
I'm not convinced that the CPI is that inaccurate or unrepresentative.
And that right there is part of the problem.
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