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Old 02-11-2016, 01:18 AM
 
Location: Nashville, TN
1,894 posts, read 1,084,233 times
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Quote:
Originally Posted by hindsight2020 View Post
When indexed for the ability to replace 80% of one's working income in retirement, the suggestion of living on 99.8% of one's income as a "technical" definition of living "below" one's means is a laughable fallacy, a twisting of the spirit of the term, and a rather facetious scoff at the person asking the question by people who don't need a large percentage of their income to cover the cost of living line (flat for every man and woman regardless of income) lecturing the guy who needs 90% of his income to cover COL.

Since I'm not afraid to offend the affluent, nor do I believe any deference is owed to them nor to their sensitivity/defensiveness regarding living in a volatile and income-polarized Country of people they are increasingly NOT representative of, I'll tackle the term. Living below one's means is a socio-economic concept; only the well to do on here get uppity and try to sanitize it as some neutral arithmetic quantity. As a socioeconomic term, it effectively means choosing to live a social and material lifestyle below the social CLASS one could afford with one's income. A very pointed and conscious choice to downgrade one's appearance, material possessions and behavior, to include affronting personal and professional associations in the process of making said lifestyle choice. That's living below one's means.

Most Americans are highly expenditure-sensitive/inelastic, that is, even at the low levels of income, they are quite inelastic to a conscious downgrade in material consumption. Most americans are trying to maintain yesteryear's lifestyle by continuing to finance it; the thought of outliers willingly driving in the opposite direction is incomprehensible to them and a social pariah. This is not conjecture. Our human relationships penalize us for making downgrading choices (the hot girl won't sleep with you, the employer of choice won't hire you, et al). To be free is to proceed with our choices in spite of the shunning, in order to attain the freedom of the "position of F*** You", as coined by John Goodman in the movie the Gambler.

Very few people are willing to make such social stances, but it can prove quite financially solvent in the long run. Now back to your regular narrative driven by the well to do on here.
Living "at/above/below your means" is a direct ratio of income to spending. It's a binary definition, much like "how do I lose weight" is simply defined as "burn more calories than you consume". The optimal amount of calories to live a healthy lifestyle is a different question, just like the optimal amount of savings to preserve lifestyle is a different question.

The question posed by the OP is an objective question with an objective answer. Your opinions or mine on how affluent the people are here is irrelevant, as is social class, retirement savings, or the spending habits of Americans.
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Old 02-11-2016, 08:21 AM
 
33,046 posts, read 20,786,319 times
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Quote:
Originally Posted by numberfive View Post
Living "at/above/below your means" is a direct ratio of income to spending. It's a binary definition, much like "how do I lose weight" is simply defined as "burn more calories than you consume". The optimal amount of calories to live a healthy lifestyle is a different question, just like the optimal amount of savings to preserve lifestyle is a different question.

The question posed by the OP is an objective question with an objective answer. Your opinions or mine on how affluent the people are here is irrelevant, as is social class, retirement savings, or the spending habits of Americans.

I like to insert my two cents here to clarify that it's NOT necessarily about one's ratio of income to consumption, because there are many ways a person can consume without commensurate spending.

One of the diseconomies of poverty that irk me is having to spend more than someone else while getting less.
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Old 02-11-2016, 09:58 AM
 
Location: Nashville, TN
1,894 posts, read 1,084,233 times
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Quote:
Originally Posted by freemkt View Post
I like to insert my two cents here to clarify that it's NOT necessarily about one's ratio of income to consumption, because there are many ways a person can consume without commensurate spending.

One of the diseconomies of poverty that irk me is having to spend more than someone else while getting less.
I get what you're saying, but don't see how it's relevant. I get free food for breakfast and lunch each day at work, so that's a perfect example of consuming without spending.

When determining my "means", I don't list out a line item for "how much did I spend on free food?". Non-costs aren't costs.

What I do instead is make two columns: Column 1 is all spending (including fixed costs, variable costs, etc.) Column 2 is all income. Is Column 2 greater than Column 1? If so, that's living below our means.

This exact same technique works whether you have $1 in expenses or $1 billion. Poverty or billionaire.
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Old 02-11-2016, 10:23 AM
 
33,046 posts, read 20,786,319 times
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Quote:
Originally Posted by numberfive View Post
I get what you're saying, but don't see how it's relevant. I get free food for breakfast and lunch each day at work, so that's a perfect example of consuming without spending.

When determining my "means", I don't list out a line item for "how much did I spend on free food?". Non-costs aren't costs.

What I do instead is make two columns: Column 1 is all spending (including fixed costs, variable costs, etc.) Column 2 is all income. Is Column 2 greater than Column 1? If so, that's living below our means.

This exact same technique works whether you have $1 in expenses or $1 billion. Poverty or billionaire.

So you get to consume more than a person poorer than you, while you get to spend less than they,
which allows you to say you live within your means while perhaps the other person (who spends more while getting less) cannot.

I think it is this reality which is feeding much of today's entitlement mentality - when the person without cost advantages gets blamed for overspending, that person is going to reach for cost advantages (e.g. freebies) whether deserved or not.

An extreme example that disturbs me is the person who is never able to buy a home and who therefore pays more than a homeowner for housing over a lifetime, while always enjoying 'less' housing and in the end having nothing to show for it and perhaps never being able to retire.
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Old 02-11-2016, 11:14 AM
 
Location: Nashville, TN
1,894 posts, read 1,084,233 times
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Quote:
Originally Posted by freemkt View Post
So you get to consume more than a person poorer than you, while you get to spend less than they,
which allows you to say you live within your means while perhaps the other person (who spends more while getting less) cannot.

I think it is this reality which is feeding much of today's entitlement mentality - when the person without cost advantages gets blamed for overspending, that person is going to reach for cost advantages (e.g. freebies) whether deserved or not.

An extreme example that disturbs me is the person who is never able to buy a home and who therefore pays more than a homeowner for housing over a lifetime, while always enjoying 'less' housing and in the end having nothing to show for it and perhaps never being able to retire.
That's why "means" are unique to the individual. Each person's spend per category is different.

Our food bills are lower, but our medical costs far exceed the savings from some free meals. It doesn't change the ratio one bit. If our medical bills were $5000/mo and our income was $4000/mo, we're living beyond our means. That's not a judgement, it's a statement of fact. We wouldn't have the means to sustain that spending pattern. And if that were the case, we better figure out a way to either A) reduce costs, B) increase income, or ideally C) both.

It has nothing to do with entitlement or cost advantages or anything else. It ESPECIALLY has nothing to do with a comparison to other people. Who cares if someone else gets free helicopter rides to work every day, it doesn't change whether I'm living within my means or not.
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Old 02-13-2016, 09:48 AM
 
8,207 posts, read 4,491,657 times
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when I built my house i wanted a one bedroom 900 sq ft house basically one bedroom and a great room, The county made me build a 1200 sq ft three bedroom as a minimum because of property vale and resell value.
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Old 02-13-2016, 09:51 AM
 
35,121 posts, read 37,950,666 times
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Our definition is no debt, no credit cards, money put aside for emergencies, food in our home and pay cash for everything or do not make the purchase.
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Old 02-13-2016, 09:57 AM
 
Location: Western North Carolina
4,765 posts, read 7,557,555 times
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Quote:
Originally Posted by canadian citizen View Post
I am still waiting for the first person on one of those TV "home finder " programs who walks in to a 2800 sq ft house and says ..............Its too dam big.


It amazes me when I see a couple ( married but no kids ) who say they " need " a four bedroom, three bathroom house. Are they going to run a bed and breakfast business ?


JiM B.
Well, they need those extra bedrooms for all those guests they spend "entertaining" all the time, and oh yeah, one room for the dog.
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Old 02-13-2016, 10:00 AM
 
Location: Western North Carolina
4,765 posts, read 7,557,555 times
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Quote:
Originally Posted by pvande55 View Post
Of course, back in 73, that was good money!
My thinking as well. It's different times.
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Old 02-13-2016, 10:32 AM
 
33,046 posts, read 20,786,319 times
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Quote:
Originally Posted by brownbagg View Post
when I built my house i wanted a one bedroom 900 sq ft house basically one bedroom and a great room, The county made me build a 1200 sq ft three bedroom as a minimum because of property vale and resell value.

Government has no business doing that but the human protectionist urge is powerful.
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