Friday, February 20, 2009

Living Within Your Means VS. Below Your Means

The other day I saw discussion on another site about the difference of Living within your means and living below your means. With the current state of our economy I think more people are focusing on this. One way to think about it is Living within your means is that you don't spend more than you earn but you also do not have much to save. Living below your means is keeping your spending low enough so that after you have paid your bills, etc. you also have money to save. Where the real trouble comes is when you spend more than you make in a month and go into debt. When you are using credit cards you have to keep in mind how much you are spending because it can get out of control really fast. Even if you can pay the minimums on your credit cards, you end up paying finance charges and interest on it and it takes longer to pay off the principal.

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