Living Below Your Means: Great Rewards With Solid Willpower   3 comments

Posted at 7:15 am in Life

livingbelowLike all newlyweds, Melissa Fey and her husband, Andy, shared dreams of exotic vacations and ambitious life plans when they married five years ago. Unlike most couples, they are well on their way to realizing those goals. They have vacationed in Germany, where Andy was raised, as well as in Jamaica and Alaska, and the couple recently bought a house in a suburb of Portland, Oregon. “I haven’t worked in a year, and we still have money in our savings account,” boasts Melissa, a stay-at-home mom.

The Feys’ secret? They believe in “living below your means,” the latest trend in financial fitness. And they’re not alone. An Internet search for the phrase turns up more than 19,000 hits. One of the most popular message boards on the Motley Fool’s personal finance Web site is devoted to LBYM. And the For Dummies series of how-to books just published Frugal Living for Dummies.

LBYM starts with the old premise that a penny saved is a penny earned. But it’s less about deprivation than about living a good life on less. As one devotee puts it, “It’s not that I can’t spend because I don’t have the money. It’s that I don’t spend because I choose not to.”

The intangible rewards of those choices can be even more valuable than the growing savings accounts. “LBYM has given us psychological freedom,” says a believer, writing on a popular financial site. “It’s the security of knowing that I don’t owe anyone anything,” explains another.

Inspired? Here’s how four families are practicing LBYM, even in these tough economic times.

Emily & Robert Terbrock ST. CHARLES, MISSOURI

What he does Carpenter

What she does Homemaker; children–ages 30, 28, and 27–live on their own.

Ages Both are 50.

Annual family income $50,000 to $60,000

Major monthly expenses Groceries, $320; credit card, $300; electricity, $40; satellite TV, $26.76

Savings One out of every four paychecks goes into stocks and retirement funds.

Their basic LBYM rule Watch out for the small, everyday expenses. Emily never gets on a supermarket checkout line without subjecting her cart to the “Do I really need this?” test. What has she given up buying? Packaged dust cloths–she decided to make her own. “Ever see how flannel pajamas pick up everything when kids slide across the floor? I bought 79 cents’ worth of flannel and cut out six cloths, which I toss in the washer and reuse.”

Walk slowly, carry a big calculator Two years ago, Emily decided she would undertake a walking program for her health and to lose weight. But before she invested in a treadmill, she did some walking outside to see if she would really stick with it. Meanwhile, she investigated which features she’d want on her machine–“cushioned track and durability”–and which she could do without. When, after a year, Emily had convinced herself that she was committed, she bought the previous year’s model: “I saved $267, and the only difference was the face plate!”

“What’s for free?” When Emily headed her daughters’ Girl Scout troop, they all enjoyed looking for activities that didn’t cost anything. She used the same standard for family excursions: Equipped with geological survey maps of Missouri, the Terbrocks would set out on weekends to find different spots of interest. “The only cost was gas,” Emily notes.

The payoff When Emily and Robert retire–“in a few years, we hope”–they’ll have their house (the mortgage was paid off seven years ago); new, paid-for cars and trucks; a pension; and “nice savings,” she reports.

Renee & Christopher Brown CINCINNATI, OHIO

What he does Fifth-grade teacher

What she does Special-ed preschool teacher

Ages Christopher is 33; Renee is 28.

Annual family income $40,000 to $50,000

Major monthly expenses Mortgage, $500, plus $200 prepayment on the principal; vet bills, $300; groceries, $200; gasoline, $150

Their LBYM rewards Frugality has allowed Renee to give up a higher-paying government job and become a teacher. Her husband was able to switch from a public school job to a private school position that he loves. Renee also earned a graduate degree without taking out any student loans.

The kitty that counts “I will spare no expense on veterinary care for our pets,” says Renee, who has nine cats and is on the board of a no-kill animal shelter. “But I have absolutely no de sire to own a DVD player.”

How keeping up with the Joneses almost knocked them down When the Browns were first married, they “spent and spent and spent,” Renee now acknowledges. “We’d see what our friends bought and think, Well, if they can afford that, we can too.” Then one day she and Christopher realized that their savings had evaporated After that, they set up a budget”–very quickly.”

Shopping by the book Renee keep a special notebook where she lists all of her regular grocery and household purchases and which store has the lowest price. When an item goes on sale, she buys enough to last until the next markdown. Other favorite money savers: She makes her own cleaning products and buys virtually all of her clothes at garage sales, outlet stores, or thrift shops. “I love to look at what I have on and think to myself, This whole outfit cost mc only $3,” says Renee.

A squeeze too far? When the toothpaste tube looks empty, Renee cuts it open and gets “four or five more brushings out of it.” But, she admits, “Even my husband thinks I’m nuts.”

Melissa & Andy Fey MILWAUKIE, OREGON

What he does Luxury car mechanic

What she does Stay-at-home mom; daughter, Sarah, was born in November 2002.

Ages Andy is 30; Melissa is 35.

Annual family income About $40,000

Major monthly expenses Mortgage, $1,375, including insurance and taxes; car payment, $450, including prepayment on the principal; groceries and household, $300; utilities, $90

Coffee to go? Or a car that goes? The Feys are adamant about sticking to their budget, “even if our friends do call us cheap,” says Melissa. “I’m always asking myself, If I buy this, is it more important than something else?” After a while, she says, “you just know that if you go out for cappuccino every day, you’re spending as much as the car insurance.” Before they buy anything big, Melissa and Andy calculate how long they’ll be using the product. “That way, we can figure whether we need top of the line or can choose a less expensive model.”

What the neighbors have that they don’t Cable TV. The Feys considered it, “but at $50 a month, it’s not worth it to us,” says Melissa.

What they have instead The money to travel, including multiple trips to Germany (Andy, three times; Melissa, twice) to visit Andy’s family.

The Ideal husband “Not a doctor or a lawyer,” says Melissa. “A mechanic.” Until recently, the couple drove a 20-year-old Volkswagen that Andy had picked up for $500. After putting another $1,000 of parts and labor into the car, they used it for five years and then sold it–for $1,600!

Bringing up an LBYM baby When Melissa received baskets full of baby oil, baby wash, and other goodies at a shower last year, she realized she could make her own baby wipes. She bought a yard of flannel for $3, cut it into seven-inch squares and hemmed the edges, then filled a $1 squirt bottle with the cleansers. “I’ll be able to use and reuse these washable baby wipes for as long as Sarah is in diapers,” says Melissa.

Kathy & John Zuehlsdorf Oshkosh, Wisconsin

What he does Police officer

What she does Former police officer (on medical retirement). They have two sons: Zak, 23, and Benjamin, 20.

Ages John is 52; Kathy is 48.

Annual family income $110,000 (John works a significant amount of overtime). The couple’s net income is $82,000 since Kathy’s disability payments are tax free.

Major monthly expenses Mortgage, $790; car loan, $396; groceries, $350; charity, $300

Monthly IRA contributions $540 (“We max it out,” says Kathy).

House proud While their friends were “trading up” homes (and taking on bigger debt), the Zuehlsdorfs have stayed put for the past 17-plus years. Now that they’re nearing retirement, they have options less frugal people may not have. “We can remain in this house and buy cottage in northern Wisconsin,” says Kathy. “Or we can buy property and build a new home. Or we can just travel and travel.”

Savings 1-2-3 The Zuehlsdorfs earmark all income for a specific fund. The couple have a college saving account–next year’s tuition for Benjamin is already there, with the following year’s still in the stock market. They have a short-tern savings account for taxes and insurance, a long-term account for new vehicles or major house repairs (such as new flooring), and just-opened “undecided” fund where they deposit John’s overtime earnings. “This month, we put 28 percent of our take-home pay savings,” says Kathy.

How they conquered their kid “gimmes” When their sons were young, Kathy and John would allot a daily budget for vacations. If any money was left over, the kids knew they’d get to keep a percentage for themselves. “They learned to walk right by those souvenir stands,” says Kathy.

Both boys are now on the way to a thrifty adulthood: Benjamin has no credit card debt. And since he was expected to pay for his own vacation last spring, “he hasn’t gone yet,” Kathy reports. Zak is living at home while he goes to college. In lieu of paying rent, he is required to put money into his IRA each month. At 23, he has almost $4,000 in the account.

Parting is now sweet “It used to hurt me to spend money,” says Kathy, but since she and John have reached most of their goals–both boys will graduate college debt free, and the couple are nearly at the point where they’ll be able to live on one pension and save the other–they have decided to have fun. Their indulgences? Two all-terrain vehicles and, for Kathy, a new Ford Explorer. “Buying these ‘toys’ didn’t even hurt much,” she admits.

Written by TheEditor on September 3rd, 2015

3 Responses to 'Living Below Your Means: Great Rewards With Solid Willpower'

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  1. My husband and I agreed that we will no longer buy expensive gifts when there are ocassions. We decided that instead of spending our hard-earned money for unnecessary stuff, we will just put the amount in our bank account.

    Lilibeth Monroe

    28 Dec 15 at 2:56 pm

  2. I believe that as one tries to save, he should also know how to reward himself. It’s not about saving all the time. One has to feel the luxury of having something to spend. It’s one way to keep one’s determination.

    Oyo L.

    5 Jan 16 at 12:24 pm

  3. I am lucky having found a woman who knows how to value and spend the money she worked hard for. I was not as thrifty as she is but when we got married I learned the importance of saving.

    Jessie M.

    11 Jul 16 at 10:52 pm

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