Live within your means-how to do it

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Most probably You have heard this phrase: ‘live within your means.’ But what exactly does this phrase mean?

modern-apartmentVery simply put, when you live within your means, you are able to pay for all the things you need in your life without taking on more debt than you are able to handle. Yet many Americans are believing that there’s only one way to get nice things, and that is to get into debt and get them.

Now that could be true for larger purchases like a home or a car, but it certainly does not to apply to many other things that we are needing in life. When you purchase a house, for example, you take a mortgage loan which will put you in debt for maybe as long as 20 or 30 years.

Sure, that is a long period of time, but this sort of debt has also many benefits. Interest paid on the mortgage can be deducted from your annual taxable income, and the money that’s yours in the house (the equity) can be applied for other loans. If you make regular mortgage payments, you will also build up a strong credit score.

Yet buying clothes, food, toys, shoes, furniture, or some other items on credit is a totally different thing. If you buy this sort of things on credit, you run the risk of building up debt for nonessential things, and the interest you are paying is not tax-deductible. You need to see that when you have finally paid for the items as well as the interest, the total cost is far higher than what was the original price tag.

You have just actually robbed yourself and your future. Instead of putting money aside for the realization of your dreams and get the life you are deserving, you have put your hard-earned dollars into the lender’s pockets.

Don’t you believe that if you would have put the money you’ve paid in interest into a savings account you would have reached your goals easier and quicker? If you pay for everyday things by going into debt is drastically limiting your future options as you will be constantly paying for yesterday expenses instead of moving ahead toward a brighter future.

Though it may seem quite challenging in the beginning, but living within your means will be rewarding. What’s even better, and maybe your next step is living below your means.

How Can You Do It, Live Within Your Means

Living within your means is absolutely possible and doable. Usually, it is only a matter of how to best make different choices. Most people are spending a significant portion of their available money on everyday things. Check out our post on how to save significantly on clothing, food, and transportation cost. We are sure that before long you will have discovered the solutions that suit you best, and you will see that living within your means has become a normal way of life.