Back in the 90's (remember those?), I used to read a thread on a forum for those interested in Living Below Your Means. There were two primary motivations for participation in that thread. The first and obvious one was for people whose finances were out of control and they were struggling to get out of debt. The second one was more philosophical and had to do with valuing non-material things over material ones. For those who started off participating for the former reason, the latter one nearly always came to be important as well.
Much of the thread was filled with specifics about how to save money as well as discussions around the best approaches to LBYM. What I always liked about that forum was that there were people on it who made very little money and others who made quite a bit. What we all had in common was the resolve not to throw away every nickle we earned. Over time, people would post about finally getting out of debt and starting to save for the first time in their lives. Those were deeply satisfying moments.
To get started then, why not post one or two of the things you do to help you LBYM or a success story of a strategy that helped you get out of debt? I'll go first and, since I'm the OP, will pick the most obvious tip.
With one exception, every car we've owned as a family has been at least 2 years old. These are the years of greatest depreciation in a new car and letting someone else take that hit makes good financial sense. Historically, that depreciation for most cars (it varies) is 20% per year for the first two years and 10%/year thereafter. One of my co-workers spent 50k on a new car. He's single with no kids and can afford it, but the depreciation alone in year 1 was 10k and in year 2 was 8k. In two years, he lost 18k in depreciation alone. Up until Jan, 2012, his depreciation alone was more than I've spent in 20 years on any single vehicle. His insurance rates and taxes were also higher because it was a luxury car. This is money you'll never, ever get back.
Resist the new car smell and buy used. Don't trade in your car every few years, drive it for ten and fix it when it breaks. You'll save thousands right from the start.
Much of the thread was filled with specifics about how to save money as well as discussions around the best approaches to LBYM. What I always liked about that forum was that there were people on it who made very little money and others who made quite a bit. What we all had in common was the resolve not to throw away every nickle we earned. Over time, people would post about finally getting out of debt and starting to save for the first time in their lives. Those were deeply satisfying moments.
To get started then, why not post one or two of the things you do to help you LBYM or a success story of a strategy that helped you get out of debt? I'll go first and, since I'm the OP, will pick the most obvious tip.
With one exception, every car we've owned as a family has been at least 2 years old. These are the years of greatest depreciation in a new car and letting someone else take that hit makes good financial sense. Historically, that depreciation for most cars (it varies) is 20% per year for the first two years and 10%/year thereafter. One of my co-workers spent 50k on a new car. He's single with no kids and can afford it, but the depreciation alone in year 1 was 10k and in year 2 was 8k. In two years, he lost 18k in depreciation alone. Up until Jan, 2012, his depreciation alone was more than I've spent in 20 years on any single vehicle. His insurance rates and taxes were also higher because it was a luxury car. This is money you'll never, ever get back.
Resist the new car smell and buy used. Don't trade in your car every few years, drive it for ten and fix it when it breaks. You'll save thousands right from the start.
