Last Friday my husband and I went to a Dave Ramsey seminar hosted by the base chapel. We watched three videos from Dave’s Financial Peace lectures as well as participated in group discussions. Our facilitator was the Chaplain, and he had an encouraging story to tell. 

He joined the military 17 years ago with no debt. He married shortly after and his wife had no debt either. Both of them were savers (that helps). He drove the same car for over 15 years. Two years ago he purchased a house, for cash. Last year he purchased a new vehicle, for cash. He rides his bike to work every day and packs his lunch. He lives below his means. They buy used clothes and rarely go out to eat. He has a credit card but in 18 years has never carried a balance. 

This man is a high ranking officer making about $120,000 a year. But that wasn’t always the case. Years ago when he joined the military he made about $24,000 a year. He lived on that salary and as he promoted and received raises he saved more than he spent. 

He told us that he watched his savings snowball over the last few years. The power of compound interest is amazing. Even in our low interest money market emergency fund we have made almost $300 this year in interest. That money is reinvested and we then make money off of the interest. As your savings grow so does your interest. 

There are people all over this country that are not feeling a financial pinch because they are living below their means. I realize it is tempting when you get a raise or a tax refund to go out and spend the money, upgrade your television, go out to dinner, or even big things like buying a nicer car, moving to a better neighborhood.

What if you continued to live on your previous income and saved the raise or used it to pay off debt? We have tried to do that over the past five years (my husband’s last promotion). We haven’t always succeeded but he will be getting another raise in January and then a more substantial raise in April. We plan to put all of that money into savings and investments. Over time that money will help us purchase a home (for cash) as well as save for retirement. 

Now I realize that many people do not make $120,000 a year (we don’t either) and that some of you might be making $24,000. The point is, what do you need to live on and can you live on less? I have met people who make significantly more than $120,000 a year and believe they need to make every penny. That is because they have two car payments, a huge mortgage, tuition, expensive dinners, and more. If they were to move to a smaller house, drive older vehicles, cook meals at home, and cut other unnecessary expenses, they could live on much less. 

What about those who are crushed by the weight of their debt? Make it your priority to eliminate debt from your life. When we decided to kick Sallie Mae out of our house we attacked that debt with everything we had. We sold stuff, we stopped eating out, we found free things to do in our area, we carpooled, and we ate a lot of beans. I did all of our family Christmas shopping at yard sales and thrift stores. 

Now that our money is not going towards debt we can save a lot of money. Currently our goal is to live on half of my husband’s income (which is our only income). We can do this because we are debt free. If we were strapped with a car payment ($400 is the average payment in America), a student loan payment, and credit card bills this would be impossible. 

The theme that I hear preached from people who are truly wealthy is simple. Live below your means, if you can’t afford it don’t buy it, buy used, and don’t carry debt. If you would like to read more about how the wealthy think I highly recommend reading The Millionaire Next Door and if you need some more tightwad inspiration read The Complete Tightwad Gazette both of these books should be available at your local library. 

Living below our means works for us, what works for you?

For more tightwad tips visit Mary. 

Follow The Happy Housewifeâ„¢ on Twitter. Click here.