In today’s economy “living within your means” is back in fashion. However, you have to define your “means.” In the most basic terms it means spending no more than you make. If you take home $2000 a month you spend $2000 or less per month. If you have credit cards and want to use them you don’t put anything on them that you can’t pay off by the time the bill comes due. You don’t create debt.
I would define your “means” as the amount of money you can make in either the first 40 hours a week you work or the salary you have from a single job. It’s common these days for both parents to work or for people to work multiple jobs just to pay the bills. Not because they want to, but because they have to.
Any additional money outside a single full time job should be considered “extra” and not factored in when making large purchasing decisions: anything you have to take out a loan to purchase.
The reason for this is simple: you’re killing yourself.
Back in college I was typically working two jobs and I think for at least a short period I was working three. But after a few years I had learned enough skills to consolidate those two jobs into one higher paying job. And that’s the key; you work, you learn you make more money in less time.
If you’re forced to work 80 hours a week just to pay the bills you’re giving yourself no time to get an education and get into a position where you can make more in less time. Because your bills require you work 80 hours at your current skill level you can’t cut back hours to go to school. You can’t cut back hours to get a life.
And if something comes up, you’re already working every waking hour during the week so you can’t go out and earn more money for an unexpected expense. If you’re living off of a salary or 40 hours a week of hourly pay and an unexected expense comes up THEN you can get a second job temporarily to work that debt off.
The first 40 hours are for living. The next 40 hours are for emergencies and extra spending money.
So really your means are not how much you make but how much you can make without killing yourself. Sure you could work 80 hours a week and afford that $300K house but do you really think you can handle 80 hours a week for 30 years?
If you want to work more to earn more money then go for it. But just keep in mind that the more you extend yourself because you have to, the more you’re going to be hurting when something goes wrong.
