There are two ways to live life:
1. We can live in a way that we spend less than we make.
2. Or we can live in a way that spends more than we make.
I suppose you could argue there is a third way: Spend exactly the same amount as you make. And that may be true, but unexpected emergencies happen all the time. Spending exactly the same as you make only lasts until your next financial emergency—and then you’ll find yourself squarely in the second group.
It would seem, looking at the options, most people would choose the first. The stress of constantly living in debt, of constantly being held hostage to your past, of even living with a sense of fear or panic is a way of life that nobody desires.
Spending less than we make is the option people would rationally choose. But most of us don’t.
In fact, roughly 60% of us spend more than we make.
Here are the statistics:
60% of Americans could not pay for a $1,000 emergency expense.
77% of Americans report feeling anxious about their financial situation.
And the numbers are only getting worse.
Why is that? Why is a life with less stress and worry so difficult for so many of us to attain?
Why do most people choose to outspend their income?
There are some who will argue that the system is rigged and it is simply impossible to make enough money to live within your means. Of course that may be the reality for some, but it’s certainly not the reason for most. And most importantly, it’s likely not the reason for your choices.
More likely, the reason so many choose to live a life outspending their income is because messaging and marketers are constantly telling us that we’re missing out by not spending more money.
Consider this: you can’t turn anywhere inside a civilized society (nature may be the only exception) without being bombarded with advertisements promising a better life than you’re living… if, and only if, you are willing to spend to get it.
We’re promised a better life by spending more with almost every turn of our head.
The promise is so ingrained in our subconscious, from the moment we are born, that we subtly and unintentionally fall into the trap.
An increasing income doesn’t quench the desire. Offers for a better life only grow with our income… nicer cars, bigger houses, fancier meals, more luxurious vacations… the temptation to overspend never, ever ends.
The promise of a better life always lies just outside our current income. So we chase it, endlessly—always spending just a bit more than we have.
But it is better to live cheap under budget than to live luxuriously in debt.
Living within your means results in a self-satisfaction that cannot be purchased at a department store.
It results in a restful calm at the end of the day that can never be experienced at the fanciest hotel.
It results in a genuine self-confidence that can never be purchased on a clothing rack.
It results in an ever-present enjoyment that can not be duplicated with a fancy vacation.
It results in an example for your family that can never be purchased with self-help courses.
And it results in a life well-lived with fewer regrets.
The world will tell you spending more is the key to a better life.
But I can attest, it is better to live cheap under budget, than it is to live luxuriously in debt.
I am 33 years old with two daughters of age 10 and 6.
Husband is the main money maker paying the majority of our bills.
Rent $2700 a month.
Electricity roughly $350 a month
Water roughly $300 every two months
Cable and internet (including Netflix, Prime, Disney+) roughly $300 a month.
Cell phones (4 lines because I pay for my 72-year-old moms cell phone) $180 a month- this is after switching to Xfinity mobile. Before we had Verizon, and our bill wouldn’t be any lower than $400 a month.
Car payment $590 a month
Insurance $300 a month, our most luxurious expense is what we enjoy the most as a family which is our RV and that is $1029 a month including insurance. add all that up $5,749 a month to just live. not including gas, not including groceries.
Husband and I just decided that we need to live a simpler life and agreed to get rid of everything in our 3-bedroom home and move into our RV, downsizing from a 2000 + square feet home to an RV that is about 420 sq feet. We use our RV every time our kids are off from school meaning we take vacations at least 3 weeks out of the year and then the RV is just sitting there not being used. We love to travel and when we are in the RV, we are the happiest. Low maintenance because I can literally clean the RV in 30 minutes, when I have to clean our house, I feel like there is never an end to it. By the time I have finished cleaning a section of the house and move on to another section, I have spent 2 to 3 days cleaning and have to do it all over again.
We are giving away our furniture to family and friends that need it or want to keep our furniture and getting rid of more than half of our bills.
It took some time researching what was our best options. Moving into our RV which we knew we did NOT want to get rid of, was the smartest decision we have ever made in our life.
Our projected expenses now will be:
RV and Insurance -$1029,
Cell phone $180
Car and insurance. $590+$300=$890.
We want to keep our internet and cable subscriptions for the time being adding – $300 a month.
Campsites in South Florida are extremely expensive but even then, we are looking at $1415 a month including water, electric and sewer.
When you add all that up our expenses are now $3814 a month.
Not only have we made ourselves less stressed out and feel less pressure when those bills start coming in. We are much happier and actually get to spend a lot more time with our daughters than we did when we were at our house.
Now for those who like to do math problems, we have reduced our spendings by $1935 a month. That money can be used now for our daughters’ educations, more family adventures and travel.
I didn’t add gas or groceries because those expenses vary week by week.
I truly cannot wait for the adventures that are yet to come.
Only adding the grocery and gas would catch up with all your savings. My grocery came down to five items, and the total cost was over fifty. If you look into moving to a place cheaper downtown, you might get the rent for the price you can afford, if you are lucky.
Thank you . I agree . Every Blessing .
I can attest to this as well for so long I fought with my lifestyle changes only because others around me made fun of me and I jus kept thinking I can’t possibly be the only one. I read a book called meet the frugalwoods that was so mind blowing then another book Mary hunts live your life half the price and then I stumbled upon you and your blog read your free ebook. I was finally at ease like wow there’s others like me. This was in 2019 fast forward to this past two years I’ve read a blog post every weekend follow others on YouTube. I’ve read your book the more of less and this lifestyle has made me so free and whole I can’t wait for spring to come for the second book release
Aloha Joshua, I am so happy to have crossed paths with this article. I’m a financial coach & I teach about budgeting, credit, smarter banking, & debt elimination. The real tools we need in life. The reality is that there is a lack of financial education. No one teaches us how to bank & its surely not taught in schools. We’re taught to graduate high school, go to college (take out loans) or work, and get a good paying job. But once you get that job what do you do with the money? We all just have to figure it out. One person has an envelope system, another utilizes a credit card, another one hides cash under the bed. These are all systems that we create ourselves & most people fail because finances are stressful. You must have a system in place. Create a budget. Know your cashflow. Know your credit. Create realistic goals. Create detailed financial projections so that you control your money instead of your money controlling you. You have to run your personal finances like a business & you are the CFO. Hope this helps anyone reading this.
The statistics are not good but many people cannot stop the cycle of debt.
Josh,
Would you be willing to share your thoughts on simplifying gift giving? It would be very helpful with holidays fast approaching.
Many thanks,
DG
P.S. Thank you for writing this blog.
I agree with you, its clear that the first option is the best. But in reality some people will take the risks to choose the second option. The example of this might be a wedding ceremony. In some place some people would like to have a big wedding ceremony although they have to take a debt while they actually can have a simpler ceremony and free from the debt.
Totally agree with living within your means
Sometimes life throws you a lesson, expect the unexpected
20 years ago i signed up for a new house and was moving in, My wife had just given birth to our first daughter and i became unemployed all in the same month.
Eventually everything worked out fine, but i always remind myself of this life lesson when looking at buying items that are a luxury and not a necessity, if you can’t afford it don’t buy it
Really enjoy reading your emails each week and peoples different point of views on the topics, i tell everyone here in Australia about the minimalist movement
I agree totally with living within your financial means. I was raised that way. When I married after college my husband was a spender. I lived in financial anxiety for 30 years. After he passed I got out of debt and now spend within my means with savings. There are no words for the calm I feel.
It is challenging to live within your means without being seen by others as being cheap. I have always lived frugally as I was a single parent raising two children without child support. Now that I’m retired I still watch my spending as the cost of living goes up yearly. I wish there was more positive messaging on living within your means but unfortunately our society is based on capitalism consumerism.
I’ve gotten so I can ignore advertising pretty well, but like you I am sometimes given the label “cheap.” It comes from family members, some of whom make more than we do and some who I’m pretty sure are drowning in debt. No matter the situation, when we make choices that let us live below our means, someone else may decide to take it badly (possibly our choice makes them feel guilty, I don’t know).
However, one result of living below our means is that we have plenty of savings should a need (ours or someone else’s) arise. We heard today that a fire destroyed the home of one of my husband’s colleagues. His employers are organizing some help for this family (they escaped with nothing but what they were wearing at the time), and I am feeling so blessed that we can afford to give generously!
We’ve always chosen #1. To live off of less than we make.
And because of that simple choice, we were able to retire early.
It’s not that complicated, but you need to accept that you cannot keep up with the Joneses. Someone will always have more.
Live off what you have and save as much as you can. Eventually you’ll have more than you know what to do with. And you’ll be happy too.
Thank you for this Joshua. I was in the supermarket today thinking how blessed I am to be able to buy what is needed without worrying that I can’t afford it. After so many years of living above my means, or just not having enough to go around, I am finally at a place in my life where I live “below” my means. I don’t go out much and try to buy what I need, not much of things I want so I am able to save enough money to go on the vacations I enjoy. When I go on vacation, everything is paid for before I go and I have saved enough spending money while there. That is a good feeling! No debt.
Yes! I tell people “do you know how I know I’m rich? I can buy anything I need or want at the supermarket without looking at the price tag”. That’s the kind of calm I have in my life. And yes to saving first to afford a holiday. I don’t understand how one can truly enjoy a vacation knowing you’re in debt for it. In that case, staying home without a debt feels like the better vacation.
I have a friend, 70, with a nice house in my CT town, and one on Nantucket. She never worked, and has 6 children. Her husband started a foundation years ago that received lots of gov’t grants, etc. Her husband is now in jail for embezzling $ from the foundation for things like: paying for one daughter’s wedding, cosmetic surgery for himself, etc. This is what boggles my mind, though: my friend is in complete denial that he is guilty. This, despite the fact that at 70, they still have a mortgage on their house b/c they took out second and third mortgages to pay for private school for their children, and she once told me they never had more than $2,000 in the bank. I was bowled over. I grew up on welfare and have always, always viewed $ as safety, security, and not as a means to show off or live extravagantly. No car, no vacation, no house, is worth a life full of anxiety and uncertainty.
Great article Joshua. My hubby and I have been through the Dave Ramsey coarse twice and honestly could use it again. It’s a struggle to not over spend especially when you don’t budget at all. Praying for Gods guidance so we can once again get it under control!
Nikki, can you tell me if Ramsey got you out of debt?
Everything but our mortgage was paid off.
Thank you for putting it in crystal clear perspective. I try to explain this to people and all I get back is a blank, blinky eyed, face. Or, they respond with,”Yeah…but,…”. So, I forward your emails to everyone for simplicity.
Great article and always a timely & intelligent reminder of the choices we make. Sometimes you can get trapped in the vicious cycle of debt, but getting out from under is so far out! (I still love this phrase), and to simply pay off a credit card and tell them you don’t want it anymore, even as these corporate vampires try to suck you back in, well bah humbug to them!
I love the link to the $25 baby onesie ? Clever
Wonderful article!!! I’m subscribed to several frugal living YT channels and I learn how to live more frugally and save more and to be content.
I would love more articles like this as I do enjoy this topic!!
Thank you!!
Hi, if you’d like to share the channels you like best about frugal living, I’d love to look at them! Thanks
Juliayn
Thank you for a steadfast reminder that all of us may choose not to succumb to advertisements and marketers providing too many choices. Your articles keep me on track of maintaining debt freedom.
I agree with you 100%, Joshua! We can do this—- no excuses.
Truth. We talked about how to spend money before we got married. We had similar values about what was important to buy and what was not.
I had loosely been budgeting with the envelope method where I would write what bills/when due so I made certain I had enough to cover them.
He did (and I shifted over) an allowance system where we would take out a set amount every Friday. It covered any meals out, movies, something we wanted, fun stuff – walking around spending money. He said that it helps you keep track of can I do this better than later looking at a bunch of ATM debits on a bank statement and not being able to remember where the money went. It also was much easier mentally that doing that endless tallying of spending 37 cents on a pack of gum detail. You open your wallet and the answer is a yes or no.
We continue to talk about upcoming big expenses and bills due. It may be just 5 minute conversation but we work to keep each other in the loop. Successful for us, for over 20 years (through several bouts of unemployment).
I love this article Joshua! We stayed in a 400 square studio for 10 years for just this reason. We could have afforded more but it would have brought stress. Now we really could afford more but we are still living very simply and helping family out. People think that bigger and fancier is better and safer but I’ve learned that simplicity and flexibility is what really works! In the end, a home is a home, food is food, clothes are clothes, no matter the price tag. If we cultivate contentment and live simply we break free from debt and stress and the lies our consumer society is telling us.
Great article!
I own what I need and what I really love.
I have learned to know the difference between a like and a need.
I use my money to buy things that I really enjoy like traveling and helping people in need.
I have borrowed money to pay down my debt and it feels good. I dont worry as much. I only do what i enjoy and that is going out to eat once in awhile. Also i enjoy music and go to concerts and buy cds.
Completely agree with this! Beautifully written. The things that bring me the most joy cannot be purchased: spending time with family, immersing myself in nature, savoring quiet moments at home, creating, learning, simply being. Thank you for sharing!
In the words of George Strait “There’s a difference in living and living well”
Thank you for this article, I have been living well since 2017 when I learned that letting go of 95% of my household full of stuff I didn’t need or really want, freed me to live with 5% of things I actually need and use. I created my own paradise with the 5% and no longer feel pressured by society, marketers or anything else to live by their rules and suggestions, I live by my own and have enjoyed the last 4 years financially sound and living quite well.
Sooo I totally agree with this.
There are lots of opportunities to spend money and get into debt, but far less social emphasis on things we can do to reduce expenses or improve our incomes.
I would love to live under my budget, but I am 77, retired, and disabled. My Social Security chrck cannot keep up with the constant rise in prices. Some months, it is a decision to pay the minimum on all of my bills or not get all of my meds or cut back on groceries. How else can I make paying my bills less stressful?
There are certainly food pantries in your area—- and if you don’t drive, volunteers would happily bring the scheduled groceries to you. That would take care of groceries—- there are many benefits and perks for seniors if you contact your local senior center.
Hi Mary,
Have you looked into Senior Services that may be of assistance to you? I am in Northern California & we have a free Magazine called Golden Pages which is a Senior Resource Magazine. I know sometimes navigating the system can be difficult, but you can also look into something similar in your area. We can also call 211 for assistance to referrals over the phone and I am sure you should have something similar where you live.
There are agencies and volunteers out there to help Seniors like yourself. I wish you well.
You need to get in touch with your local welfare office. EBT cards are available for you to buy grocers and Walmart will let you buy with that card and even deliver to your door in some areas. Amazon will too although that is just pantry things. Your insurance company may have a volunteer to take you to dr appointments. You should be getting your meds reasonably cheap through Medicare and Medicaid. Same delivers them to your door. There is help for your electric bill. Ask. There is help out there. Reach out.