BYM 101

Budget with Adaptu and Mint – One Blogger’s Review

June 9th, 2011

With our current Below Your Means Basics focus on Budgets, we thought it would be interesting to comment on a few of the major pieces of tracking and budgeting software in the market today.  The editors at Below Your Means currently use Quicken Deluxe 2011 for all of our personal finance tracking and budgeting.  However, there are cloud-based solution such as or Adaptu.  These have the advantage of having no software maintenance you have to do on your own computer, and they’re free, which makes them a great value.  If keeping track of some very complex financial situations is important to you, or you’re leery of having your data in the cloud, Quicken Deluxe may be worth it.

The Narrow Bridge Personal Finance Blog has a excellent review of these two products. If you are looking to jump into either one products, I recommend giving the article a read first.

Eric, over at Narrow Bridge Finance, reviews each product in the following categories:

  • Interface & Navigation
  • Account Management
  • Analysis and Reports
  • Investment Tracking
  • Community
  • Overall

Based on the review, both and Adaptu are tied for first place, each having their own strengths and weaknesses.

I have used for a long time and have no plans to leave it behind, but I now have two aggregators in my bookmark list. I use Mint for my overall quick view, but I have Adaptu for more in depth looks into my investment and my travel reward tracking.

I would recommend reading the full review to determine which site works best for you.  The Narrow Bridge also has other good reviews of vs. Thrive and vs. Pageonce. Alternative – Adaptu: The Showdown of Mint vs. Adaptu | Narrow Bridge Finance

Below Your Means Basics: Getting Your Budget Done

June 9th, 2011


Getting started with a basic budget

If you’ve been keeping up with your Below Your Means Basics series this week, you’ve now thought through your goals and why you’re building a budget.  (If you’re just picking up the thread, you can find the first post here).  You’ve started having sane conversations with your spouse about what you value and how much things are worth to you.  You know you want to take more control of your finances.  What do you actually do about it?

A Note About Tools

We’re not going to get into the mechanics here of how to implement your system on any given piece of software.  You need to be honest with yourself about what will work for you. If you are intimidated by personal financial software, get an printing calculator and a notepad.  I say “printing calculator” and not “calculator” because you’ll REALLY want to have that record of what you entered when the math doesn’t add up.  If you do go low-tech, the envelope method seems to be pretty popular.  All you need to do is get an envelope for each category in your budget and put the cash you have to spend each week or month in there, after paying your bills by check.  You take the cash out of the appropriate envelope when you need to make a purchase.  When you’re out of cash, you stop spending.

If you go the software route, there are lots of options. Computer tools are a terrific way to track your spending and, with a little bit of patience and work, you can pretty easily manage a budget with one.  For fairly simple scenarios without a lot of investments to track, is a great free solution.  If you are nervous about using a cloud resource, we personally use Quicken Deluxe 2011 .  You may also already have a basic spreadsheet program on your home computer, such as Microsoft Excel 2010 .  Additionally, there are free spreadsheet tools such as Google Docs Spreadsheets.

Getting Your Budget Done

Below is a step-by-step description of getting your budget implemented.  Many sites recommend that you have 3 months of tracking information in place before you start drawing up your budget.  We disagree.  If you have thought through what you value and what you are able and willing to control, there is no reason why you can’t start now.  Just remember Principle 3, that your budget is a living, changing document that you will revisit frequently.


Create your list of spending categories.   Don’t edit too much as you draw up the list, just write down the categories of things you spend money on.  Once you have the list done, take a look at the tips below, and review the categories to see if you missed anything.

  • If you’re using a software tracking tool, they have a list you can use to start from but don’t take it as gospel.  Note:  Don’t try to manage your list in your software product just yet. You’ll be making so many changes as you go that it will drive you bonkers to implement them all in the tool.
  • Include savings goals and debt payment goals.  We’ll talk about saving more next week, but for now consider that you want to save for both emergencies and retirement, at a minimum.
  • Do NOT confuse “making a credit card payment” with “spending”.  What you spend each month is what you spend, whether you put it on a credit card, wrote a check, used your debit card, or paid cash. Making a credit card payment is divided into two pieces – paying interest and paying off principal.
  • DO make sure you include a monthly amount for paying down the principal on any credit card debt or other non-auto, non-mortgage consumer debt you may be carrying.  Call this something like “debt reduction.”

Here’s a sample list:

  • Auto – car insurance, car maintenance and gas
  • Babysitting – really any childcare services
  • Charity – charitable donations
  • Clothing – family clothing for the kids.  each adult is responsible for their own clothing
  • Dining and Entertainment – going out and having fun
  • Enrichment – gym memberships, classes (including after school activities for the kids), and the like
  • Groceries, Toiletries & Misc – daily consumables like food, toilet paper, cleaning products, over the counter medicine, etc.
  • Housewares – bedding, glassware, any other purchase for the home
  • Housing – mortgage interest, mortgage fees, utilities, and repairs
  • Medical – medical insurance and medical bills
  • Services – any kind of professional services, from housekeeping to haircuts
  • Vacation – saving up for vacation
  • Savings – paying down credit card balances, building up emergency funds, retirement savings, etc.


Group your categories into areas of control.  Obviously the simpler and more personal you can make this, the better.  There are things you have to pay that are hard to change (fixed expenses), things you have to pay that are easy to change (variable expenses), and things you like to spend money on (discretionary expenses). Those are the 3 easiest groupings to manage, and you may find that your category list changes once you take this approach.  For example, using the list above:

  • Savings Goals
  • Fixed Expenses: Mortgage Principal, Mortgage Interest, Mortgage Fees, Car Principal, Car Interest, Medical Insurance, Auto Insurance
  • Variable Expenses: Groceries & Toiletries, Car Maintenance, Gas, Utilities, Enrichment, Housewares, Services, Medical Bills, Babysitting, Utilities
  • Discretionary Expenses: Dining and Entertainment, Charity, Vacation

Now that you have these organized you can finish up with your budget categories.  Again, group along the lines of what you value and where you can make changes.  Within the “fixed expenses” category, pretty much all of your insurance costs are going to be hard to control on a month-to-month basis.  So group them into a single “Insurance” category, add up your total insurance payments, and you now know your monthly budget for insurance.  Within the “variable expenses” category, you may decide that housewares, groceries and toiletries all belong in the same pile.  You may also not need child care services outside of discretionary expenses, so you can lump that in with “Dining and Entertainment.”

Play around with a few different category groups as you go.  Even if you are handling your budget in software packages, you may want to do some of this on paper while you are settling into a groove.


Once you have a set of categories and they’re organized, it’s time to budget.  Start by taking a look at your existing spending if you have the records for it, and see where your money is going.  Take note of your fixed expenses, as they will be tough to move.  Then, take a look at your savings goals, and set some dollar amounts for the various types of savings.  Once you have those numbers in place, you are ready to tackle your variable and discretionary expenses.

Income – Fixed Expenses – Savings Goals = Total Variable and Discretionary Spending

You can get lost here pretty easily because there is a good chance that you are currently living at or above your means, and fitting all your spending into your income could be painful.  Don’t give up. Remember to think about what you value and what certain conveniences and luxuries are worth to you.  The value equation is all about understanding the true cost and benefits of your spending.  Worth is a bit more esoteric, but it helps to realize that while a purchase might be a great value, it still isn’t worth it to you, right now.

The detail you put into budgeting your variable spending is entirely up to you.  Some people prefer the method of figuring out their fixed expenses and their savings goals, and then letting the chips fall where they may.  Other people want to be more deliberate about it, and make sure they have money set aside for important but not urgent things, like our family’s Enrichment budget.  That reminds us to cut back on things like groceries and housewares where we can in order to make room for positive experiences for ourselves and our children.  But again, it all depends on your personal situation and personal goals.

One thing you must absolutely do within your budget is make room for the unexpected. If at all possible, do this in addition to your savings goals, or you will find that you continue to run up your credit cards as the unexpected strikes.  So, your budget formula should really look like this:

Income – Fixed Expenses – Savings Goals = Total Variable and Discretionary Spending + Slack

After you’ve completed all this, you’re ready for the hard work of cutting back on your spending to fit within your budget.  If you’re not on the verge of financial ruin, be gentle with yourself and take a few months to get into the swing of things.

Software Note: Some software programs will have some extra features that make it a bit more complicated to track, say, a mortgage payment.  The software will want you to enter a value for your home, the size of the mortgage, and break up your mortgage payment into principal, interest, and any fees.  Stick with those features as they will eventually give you good information.  Otherwise, simpler is better.

Special Considerations for Spouses

If you’re in a relationship that involves joint finances, decide how to handle splitting up your money.  We strongly recommend the yours/mine/ours approach, which involves each spouse contributing to a household budget and retaining a portion of the budget for their own spending.  How far you take this has everything to do with how you manage decisions in your relationship.  In our research we’ve found four common methods:

  1. It’s all our money.  We don’t recommend this approach, but sometimes things are tight enough that it’s the only way to go.  But, if you drill into the budgets of people who claim they follow this strategy, often times you’ll find that they actually use method #2.
  2. Each spouse gets an allowance.  In this method, all the money goes into a common pool except an allowance for each spouse to spend on whatever they like.  Allowances are not necessarily equal depending on what expenses are included in the allowance.  If this is just plain ‘fun money’ than equal allowances are the best option.  If each spouse is responsible for their own gas, car maintenance, clothing, etc., then a realistic couple will dispassionately take those differences into consideration (for example, the couple where one partner spends more time driving than the other).
  3. Each spouse contributes equally to a household budget and keeps the rest of their income.  In this method, the household budget is split evenly.  This is a common approach for 2-career couples, especially if their incomes are similar or they are libertarians.
  4. Each spouse contributes to the household budget in proportion with their income.  In this method, the household budget is divided based on the spouse’s ability to contribute.  It has the benefit of feeling more fair and preventing disagreements about spending based on the difference in each partner’s perception of what is affordable.

Talk through these options and experiment to find out what is best for you.

Tomorrow we wrap up our Budget Basics with common pitfalls to avoid.

Photo Credit: Alan Cleaver

Below Your Means Basics: 3 Principles for Budgeting & Tracking, Pt 2

June 8th, 2011

Yesterday we discussed our 3 Principles for Budgeting and Tracking.  To recap:

Principle 1: The purpose of tracking and budgeting is to help you understand if your spending is in line with your goals and values.  Only then can you tell if a purchase is worth the money.
Principle 2: Organize your categories based on how easily they are controlled.
Principle 3: Your budget is a living thing that you will revisit on a regular basis, so don’t stress about making it perfect

Today we’d like to touch on a handful of special circumstances that warrant some additional attention.  Tomorrow we’ll start moving more into the mechanics of building a budget.

Special Circumstances

DetourBudgeting with a Spouse

Remember Principle 1?  That tracking and budgeting are all about measuring your values against your resources?  Here’s why money can be a huge source of friction for couples.  You’re not talking about your spending, either individually or as a family.  You are talking about your values, as individuals and as a family.  That’s difficult.  So go easy on yourselves.  People’s sense of self-worth, upbringing, status, personal reward systems and more are all bound up in discussions about what spending is reasonable.  Take the time to understand the why behind the decisions.

There are as many ways to divide up financial resources and financial responsibilities as there are couples, but one thing that generally correlates with happiness is to have three major budget buckets: your money, my money and our money.  Everybody needs a space to do what they want, even if it’s a small space.  Give yourselves room to breathe and, especially, to not have to agree on everything — even if it’s just $20 a week or a month.

Note that the yours/mine/ours buckets do NOT need to directly match up with income.  How big you decide to make the pots depends on your attitude about money as a couple, and you should tread lightly and carefully while discussing this subject.  More on this subject when we discuss the mechanics.

Budgeting with Kids

We can’t say it enough: include your kids in this process.  Especially if there haven’t been any real spending controls in your household, your kids are going to know something’s afoot.  Either you are going to have to say “no” more, or you’re going to be talking money with your spouse.  There’s a good chance they’ll notice you paying attention and want to know more.  So include them!  Some ideas:

  • Give them a fixed spending amount for a family vacation.
  • Pay them an allowance (either based on completion of chores or just time-based) and, except for birthdays and other holidays, don’t buy them toys
  • Have them help cut coupons or comparison shop at the grocery store with you
  • Have them save up for a more expensive toy and go through a budgeting process themselves.

Budgeting for the Self-Employed

If you’re self employed you have two major issues:

  • You can sometimes wind up with a ‘big check’ that makes everything seem different
  • You can sometimes go without income, especially if a customer doesn’t pay

In other words, your income stream will be highly variable, which creates a difference between your income (how much money you make over time) and your cash flow (when the money actually shows up).  Your mortgage company will not want to hear that you just closed a big deal and you’ll be able to pay them in 45 days.  They will still charge you late fees and hit you with other penalties.

The first thing you need to do is get a decent, realistic projection of your income.  If you’ve been in business for at least a year, you can do this by averaging the past 12 months.  But pay close attention to trends — ask yourself if your income rising or dropping compared to last month, or the same month last year?  If you don’t have that kind of history, you’ll need to make a very conservative estimate.  Remember you can always adjust upwards in the future if you want to, but if you overspend now it will likely turn into long term credit card debt at very high interest rates.

Once you have a realistic projection of your income, start “paying yourself” that amount once per month.  If you have an LLC in place this should be easy, since you probably set up a company bank account for the business.  If you don’t have a separate checking account, now is a good time to set one up (and to set up a budget for the business, too).  Transfer your monthly pay from your business account to your personal account every month, like a paycheck.

Budgeting for Higher Income and Net Worth

If you’ve already achieved the magic income level, or net worth level, where you thought you would effortlessly breeze through your financial life, then you’ve probably realized that it just doesn’t happen that way.  With luck you haven’t been spending too much money keeping up with other people’s lifestyles, but there’s a good chance you’ve found yourself in a car or house that is more than you really want to spend.  You may be spending your money as fast as you are earning it, leaving yourself vulnerable to emergencies and changes in fortune, and unable to seize new opportunities you uncover.  If that’s the case, the same principles apply to you, but you’ll have more flexibility and more challenges.

For one, it will be easier for you to implement your/my/our money if you have a bit more disposable income.  The risk is that you overdo it, but be grateful that you have the chance.  Second, housing and auto payments may not really make sense in terms of your budget.  This is because past a certain income or net worth, you don’t need to finance larger purchases as much as you did in the past.  So the idea that a mortgage or a car payment shouldn’t exceed X% of your income doesn’t make sense – especially if you don’t want the cost of your house or car to rise proportionally to your earnings.  Also, you may find that your earnings are highly variable due to business conditions, and so budgeting based on your monthly take-home pay don’t apply to you.

In these cases it’s important to have a clear idea of what your current goals are, so you can allocate your resources wisely.  We’ve noted in the past that a high income doesn’t necessarily lead to happiness.  Get a good handle on what you think is reasonable to spend, and build your budget from there.

Next week, the mechanics of building a budget.

Helpful Links

Don’t Spend Any Money… Establishing a baseline for spending | Super Frugalette | interesting take on the difference between what you have to spend, and what your budget is

Honey, We Need to Talk … About Money | MintLife | On the value of discussing money in a relationship, with some conversation starters.

Five Budgeting Myths | FiveCentNickel | Budgeting excuses removed

My Self-Employed Monthly Paycheck | BudgetsAre$exy | Dealing with the ups and downs of self-employment


Thumbnail Photo: Blocks 1 by Crissy Alright

Story Photo: Detour by F Delventhal

Principle 1: The purpose of tracking and budgeting is to help you understand if your spending is in line with your goals and values.  Only then can you tell if a purchase is worth the money.









Principle 2: Organize your categories based on how easily they are controlled.

Principle 3: Your budget is a living thing that you will revisit on a regular basis, so don’t stress about making it perfec

Below Your Means Basics: 3 Principles for Tracking & Budgeting

June 7th, 2011


Everything should be as simple as possible, but not simpler - Albert EinsteinUnless your means are very large and your tastes are very modest, it will be difficult to live below your means without tracking your spending and creating a budget.  You may entertain a fantasy that, if you just hit some income goal, everything would fall in to place.  You’ll have to let that go.  As your income grows, the possibilities of what you can and can’t buy change.  Before you know it, you’re spending more on everything – food, eating out, clothing, travel, your car, your home, whatever.  The best way to handle your finances is to handle them with purpose, and in order to know what you’re doing you’re going to have to, well, know what you’re doing.  And that means tracking it. Once you’re tracking your spending, you’ll need to know where your limits are in order to avoid exceed them.  And that means budgeting.  Don’t worry – while this task can be tedious, it doesn’t have to be, and you also don’t need to overdo it.

Like Einstein said, you need a system that will be as simple as possible, but not simpler. In this post we’re going to talk about the overall process of tracking your finances and building a budget, and point you to as many sources for ideas as we can.  As we are fond of repeating, money is a tool that you can use to advance your goals, and the best way to manage it is knowing what those goals are.  This article should help you put the whole process of tracking and budgeting into perspective.

Note: If you are in a credit crisis and facing bankruptcy, repossession, wage-garnishment, or other major financial consequences, then as much as we wish we could help, we’re not really the right place for you to get the information you need.  While we will be addressing debt reduction strategies in this series of posts, you may be in need of legal assistance that we are not able to provide.  Our favorite online legal resource is  Nolo’s Bankruptcy Center has plenty of good, free information and they also offer a variety of for-fee products to help those with serious credit and debt problems. 

3 Principles for Tracking & Budgeting

When you start tracking your spending (especially if you have joint finances with a spouse) you can drive yourself crazy in a hurry.  You gave your kid 50 cents to buy a toy from a vending machine at the mall.  Where should that go?  Your partner buys lunch at work and you make yours from the grocery budget.  Should you pay for the groceries that really go to your lunches?  You took out money from the ATM but you can’t remember what you spent it on.  You went to Target, Wal-Mart, or Amazon and bought groceries, medicine, toiletries and clothes on the same order.  Should you break them up?

These kinds of questions can get out of control in a hurry.  Tracking everything really isn’t the point though.  Remember that the point is to understand if your spending is in line with your values.  Which leads us to…

Principle 1: The purpose of tracking and budgeting is to help you understand if your spending is in line with your goals and values.  Only then can you tell if a purchase is worth the money.

As an example, consider two single men with incomes of $50,000 per year.  The first is very extroverted and finds much fulfillment in spending time with friends and meeting new people.  Three to four nights a week you can find him in a restaurant or a bar, where he typically spends somewhere around $40 on food and drinks.  He also spends $30/month on a gym membership where he works out and plays basketball with an informal group that is constantly adding and losing members.  Our second man is fairly introverted and has a small group of close friends.  He loves to cook, and a few nights a week he has his friends over for dinner.  He doesn’t belong to a gym, but has a cleaning service that keeps his condo looking good for $100/month.

Our extrovert would find our introvert’s grocery bills silly, and he has no problem cleaning his apartment once a month himself (give or take a few weeks).  Our introvert would find our extrovert’s restaurant and bar expenses shockingly high, and is happy to work out alone in his building’s small gym.  But, they both are enjoying spending time with friends and are exercising.

The obvious corollary to Principle 1 is that you need to have some idea of what your goals are and what things are important to you.

Principle 2: Organize your categories based on how easily they are controlled.

The whole reason you’re tracking your spending is so you can control it better.  So, it makes sense to group items in terms of your level of control.  When businesses do this, they refer to fixed costs and variable costs – meaning the things they have to spend every month regardless of what they do, and the things that vary depending on what they do.  For example, your rent/mortgage and current car payments will take serious work to change; you can’t just decide tomorrow to live in a cheaper apartment and have your rent change.  A second group are things that still take work to lower, but aren’t going to change overnight.  For example, your grocery bill, toiletries, regular medicines, insurance, etc. are probably places where you could save money but that won’t go away entirely.  Entertainment, eating out, etc are pretty much discretionary and, if you really wanted to, you could stop them within days.

Once you have these groupings in place, you can use them to help you understand the level of detail you should use in your tracking system.  I have found that it doesn’t really matter very much for me to track all the details of my entertainment spending.  I just know that I have a fixed amount of discretionary spending each month, and I need to stay within that.  If I spend it on movies, or drinks, or dinner, or taking my kids out to lunch, it’s all the same – discretionary spending.  No real value to budgeting it.  For my mortgage, mortgage interest, car payments, and other large fixed expenses, tracking them individually is pretty simple to do and helps me understand if I’m spending too much in those areas (or could afford more if it’s important to me).  The rest – groceries & toiletries, clothing for the kids, clothing for myself, repairs on the house, professional services like haircuts and dry cleaning – are all in a grey area, and for me, are a great place to focus.

Also, don’t forget your savings goals.  You can take a number of different approaches to this, but they boil down to ‘spending as little as possible and saving the rest’ or ‘setting a savings goal and then spending the rest’.  Which you choose has everything to do with your appetite for living frugally, your desire to increase your earning potential, and when you want to retire.

Principle 3: Your budget is a living thing that you will revisit on a regular basis, so don’t stress about making it perfect

This principle speaks for itself.  As you achieve your goals and new opportunities present themselves, you’ll want to re-arrange your savings and spending habits.  The activity of tracking and analyzing your spending will, in and of itself, lead to changes.  So don’t stress, and don’t fear.  Whatever reasons you have for procrastinating aren’t valid.  Whether you are earning a six figure salary and want to make the most of your income, or you are stuck on a credit-card treadmill and trying to figure out how to get off, the first step is getting the information in one place.

Tomorrow we will discuss some special circumstances, including dealing with spouses and families.

Helpful Links

Track Your Spending.  Or Not. |  Wisebread  |  An interesting take on value-based tracking and budgeting

How to Budget if You Hate Budgeting | FiveCentNickel | A great broad-brush way to budget for those who hate getting into the details


Thumbnail Photo: Blocks 1 by Crissy Alright

Story Photo: Simple 2 by Kristian Bjornar




Below Your Means Basics

June 6th, 2011

This month we will be presenting a series of Below Your Means (BYM) Basics articles to help those of you who are new to living below your means, and serve as a refresher for those of us who have (or strive to) live the BYM way.

When you live below your means, you shed a huge source of pressure and strain in your life.  Spending beyond your means, in other words – going into debt – means you are trading your future to get something now.  You are agreeing that in the future you will be willing and able to have a certain amount of money.  But none of us can predict the future.  There are lots of ways people get into trouble with debt.  Accidents and health problems lead to massive medical bills and lost wages.  Your ability to earn can be impacted by layoffs, swings in the economy, your own health, and the health of your loved ones.  Those common tragedies are only one reason to worry about spending more than you have.  In fact, bankruptcy laws are in place to protect people specifically from those kinds of ‘unexpected’ crises.

Money CastleThere is a much more insidious price to pay for living beyond your means.  Doing so assumes that you know now what you will want and need in the future.  In reality, most of us aren’t entirely sure what we want and need today, much less the kinds of opportunities and challenges we’ll face tomorrow.  When you take on debt and fail to save, you narrow the possibilities of what the future could hold.  Want to move to a new town?  You’ll need a job with an income sufficient to pay for your debt, and you’ll need to sell your house before you can buy a new one.  Tired of your car?  You can’t sell it because you owe more money on it than it’s worth.  Have a great opportunity to travel to a place you’ve always wanted to visit?  You can’t take the time off, and you don’t have the money saved up to go.  Hate your job, or worse, discover that your career is unsatisfying?  You’re stuck because your monthly payments are too high to switch to something new.

Saving, on the flip side, acknowledges not only that you need to be prepared for the problems of the future, but that you want to have resources at your disposal to seize the opportunities that come your way.  Want to move to a new town?  Sell the stuff you don’t need, get a few leads on some work if you need them, and get going.  Tired of your car?  Sell it and get something else (or go without).  Have a great opportunity to travel?  Plan a leave of absence and head out!  Hate your job, or worse, your career?  Feel free to get started on the next chapter in your life.

In short, money is a tool that you can use to achieve happiness.  It certainly isn’t the only tool, but it’s an important one.  Using it wisely requires that you know yourself and what makes you happy, and you understand that as you grow and change, your wants and needs will grow and change.  While our site isn’t designed to help you live a deliberate, centered life, there are a few resources we recommend to do so.  Franklin Covey’s The 7 Habits of Highly Effective People, while centered a bit too much on an upper-middle class suburban existence, has a great process to follow to think through what is important to you and how to get there.  And David Allen’s Getting Things Done: The Art of Stress-Free Productivity is such a great way to organize your life that he has spawned what Wired magazine referred to as a cult of hyper-efficiency.  Covey’s book especially can take you to additional resources on how to live a successful, meaningful life, but honestly — whatever helps you discover more about yourself, and how to make good choices, go for it.

This month we’ll explore:

  • The Basics of Tracking Your Spending and Building a Budget: This is the single step with which your journey starts.  Sure, you can cut down on your spending, even significantly, without knowing where your spending is going.  But finance is, at it’s most basic, an exercise in math.  If you bring in more money than you spend, you’re living below your means.  If you don’t, you’re not.  Tracking your spending isn’t everything when it comes to living below your means, but it’s hard to be successful without it unless you institute an all-cash system.  Fortunately, there is a whole industry building computer software to help make it simple, and some of it is free.
  • The Basics of Debt and Savings: Debt means giving up opportunities in the future for a lifestyle today.  It is a very dangerous gamble.  You will also see how to use debt as means to manage your cash flow and take risks to increase your wealth.  If you have consumer debt now, you’ll need to first and foremost – stop digging the hole deeper!  Next, you’ll need to pay that debt off as soon as possible and free your future from the tyranny of your past decisions.  Savings, on the other hand, gives you freedom.  It means you have protection from the unexpected and resources that you can use to seize opportunities.
  • The Basics of Spending Wisely: Tips and tricks for spending the least amount possible on things that aren’t critical for happiness and health.
  • The Basics of Living Richly: Spend your money on things that bring you true satisfaction and happiness.  Spending as little as possible for everything else.  Knowing the difference isn’t always easy, and we focus on tools and techniques to help you get there.  To start, realize that most millionaires are ordinary people who live modestly.  And, as this study shows, money doesn’t necessarily bring happiness beyond a certain income.
  • The Basics of the Investing Smartly: Keep tabs on the economy and investing opportunities.  While we aren’t a strict investing site, nor are we financial advisers, we do report on happenings in the economy so you can make educated decisions about where to put your hard-earned savings.  We also believe that, like personal debt, government debt is very risky and the government’s inflationary and spending policies are significant risks to personal well-being and to our country’s future.
  • Common Pitfalls: Identify common pitfalls on your way to financial independence, and share the stories of people who share your commitment to living well by living below their means.


Thumbnail Photo: Blocks 1 by Crissy Alright

Story Photo: Frits Ahlefeldt-Laurvig

Below Your Means Zen: My Favorite Pot Lid Is Broken

June 3rd, 2011

And now for a Below Your Means moment of Zen:

My favorite pot lid is broken.  It’s a glass lid that goes over a small stockpot – perfect for boiling up a serving or two of pasta.  The lid has a dent in it.  It’s a perfect little dent that lets steam escape without the pot boiling over, and when it comes time to drain the pasta, if I make sure the dent is at the bottom when I tip the pot over, the water all drains out without needing to use a colander.



Frugal Fail: “Smart” Tea for $1

June 2nd, 2011


Money Fail Sweet Tea

Driving today I heard a McDonald’s ad on the radio.  In it, a guy decides that since he’s “smart enough to get a sweet tea for just a dollar” he is also smart enough to build a gazebo.  His female companion points out that he’s building it upside down, and the guy sheepishly agrees to call the “gazebo guy.”

He should have called his 2nd grade math teacher.

Drinks (alcoholic or otherwise) are one of the most overpriced things you can get in a restaurant.  Now, I’m all for going to the bar with friends, or treating the family to a dinner out every now and then, but nobody should be excited about the “deal” they are getting.  For about $16 you can get a bucket of Lipton Iced Tea Sugar Sweetened Iced Tea Mix (Pack of 2) that makes 56 quarts or about 14 gallons of tea, which is enough for 56 large 32-oz servings of McDonald’s tea.  In other words, you can get the same serving for about $0.20 cents at home and the McDonald’s “deal” is 5x the cost.

Amazingly, the $1 tea from MickeyD’s isn’t the biggest rip off in tea … For $6.98 at, you can get a packet of 10 instant tea mix packets.  That’s $.69/glass, IF you make them at home.  But the marketing guys show a bottle of water on the box, which will set you back another $1 – $2 at the convenience store.  That’s somewhere between $1.69 and $2.69 for a glass of tea.

We recommend you get a high quality portable thermos.  Personally, I use a Contigo West Loop Mug that will keep a cup of coffee hot, or a refrigerated drink cold, literally all day.  Using it means I’m NOT spending $1-$4 a day on drinks, depending on what I’m not buying (coffee, soda, or just plain water).  That might not sound like much, but over the course of a month (workdays only) it can add up to $20 – $80.  Let’s call it $50/month or $600/year that I can either invest or spend on things that really matter to me.  I think that’s better than spending $20 a month for 20 glasses of tea.

Just for fun, here is a video of tea being made at McDonald’s: