I find that those who make good money spend it. When I was a struggling college student my wife and I were extremely frugal. We watched every nickle and was actually able to save during those college years. Those financial habits have left a permanent mark on my psyche and we still save around 40% of our monthly income. The question is should you keep trying to live like a college student?
First, if you continue to live like a college student, you can save a good amount of money. I continue to save around 40% of our monthly income because I choose not to over indulge in expensive habits. I do not need an $80 dollar pair of jeans or $150 dollar pair of shoes. I do like quality, but I can generally find it at discount stores like Ross Dress For Less or Amazon. I know a lot of people who really do not even look at the price tag. I still watch my money closely and that will never change.
Second, do not buy an expensive house. Having a nice home is certainly a part of the American dream, but I do not need to become house poor as a result. If you have little cash because you are having to make payments on a massive mortgage, property taxes, etc., you are house poor. I do not need a fancy house to make me feel better.
Realistically, you should not exceed 28% of your gross monthly income. Our gross income is close to $6,400. Gross income is the amount of money you earn before taxes or other deductions are taken out. Our net income is around $5,300 per month. Our mortgage is $435 per month, HOA is $99 per month, property taxes average $62.5 per month and home owner insurance is around $70 per month. That averages to $666.5 per month. Yes, basically the mark of the beast. I always knew it felt evil making my payment. As you can see, however, I am well below the 28% of our gross monthly income.
The point I am trying to make is live below your means. Just because you can afford a nicer house does not mean you should get it. We live in a nice condo that only cost $71,500 and life is good. Maybe down the road we will have to find a bigger home with our new addition coming soon, but we will still wait several years before that is truly considered. Oh, we found out the gender of our baby last week and we are having a girl. We plan on naming her Emma.
Third, do you really need a $30,000 dollar car? Now, I am not saying buy a cheap car that will be breaking down every other day. I think you need a dependable car, but buying a brand new car is not the way to go. It loses value the moment you drive it off the lot. I would not spend more than $10,000 on a car. That is me, but really the point is I do not want essentially another house payment. I just would not go there. Besides, you survived college without an expensive car (I am assuming), so you can continue to make it without a nice set of wheels. Settle for average!
Lastly, keep your food budget under control. I am not saying you have to continue to eat Ramen Noodles, but eating out every other day will destroy the budget. Cooking is the cheaper way, but if you are too tired I would accept you buying something off the dollar menu from time to time. Not the best solution by the way, but I am willing to forgive your sins. Just this one time I guess. Yes, I now your Priest.
By continuing to live a frugal lifestyle, a person can really save a large amount of money and provide you with more options. I love having the freedom to make more choices and not allow the lack of money to hinder my ability to live the life I want. Having this liberty did not happen over night. My wife and I really had to go without for many years to accumulate what we have, but the struggle was worth it.
This blog is not meant to trick you into believing you can make money quick. It takes time, discipline and motivation to reach your financial goals. Achieving meaningful things is never easy, but I have faith that you will reach those endeavors in time. Never lose hope!
So, do you still live like a college student? Does it bother you when you see friends blowing their money? It drives crazy, but it is their money. I have to remember that.