Living below her means:
Lori, 30-something, marketing, Columbus, Ohio
My husband and I both had credit card debt when
we were in our 20s, but by the time we were married we had no consumer
We moved to a larger house three years ago,
and it was a breeze to get a mortgage approved. At that point we
had about $45,000 in equity in our former home and the bank was
willing to lend us $380,000! I was astonished. Neither my husband
nor I could conceive of spending so much of our income on housing.
We upgraded from a 72-year-old three-bedroom
house to a 12-year-old four-bedroom with a large master suite, a
family room and sun porch. The house cost $200,000 and we spent
$35,000 cash the first year on new furniture.
Living below our means has given us psychological
freedom. In 1999, both my husband and I decided to switch careers.
I went from a marketing job, with constant travel, to a similar
position one mile from home -- and a pay cut. My husband went from
a 12-year teaching career to working in network administration.
The training we had to pay out-of-pocket for him to do this was
$7,000 -- and he was out of work four months to train.
In 1999 our gross income was $40,000 less than
in 1998. We now have the same gross income as we did before the
switch -- but we never could have done this if we weren't living
below our means.
It kills us to pay interest on anything. Our
vehicles were a 1992 Ford Ranger and a 1994 Ford Taurus. Last year
we decided to replace the truck. We went shopping and planned to
spend about $16,000. We came across a new Dodge Dakota Quad Cab
for $23,400. We decided to buy it and took a 48-month loan to get
the best interest rate -- and put $10,000 down. That was in November
By paying double payments for a few months,
using a bonus I got and our income tax refund, we paid it off in
April 2000. We felt that the $400 we paid in interest was a decent
value to get a vehicle we loved so much. Now, except for our mortgage,
we are debt-free again.
I guess the bottom line is that living below
your means gives one the psychological freedom to make the choices
that one wants to make, without having to worry about the price
tag. I think that we are less stressed than some of our friends
who have multiple vehicles, live in giant houses, take expensive
vacations and re-decorate every other year. We're happy.