Reply to Spinoff: How do you live below your means?

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[quote=Anonymous]
I have a friend I went to high school with, and have been friends with ever since. When I say she's wealthy (not just rich) I mean for generations.

Her dad gave her the advice, after she graduated from college and was still living like a privileged post-college kid, to always remember that once you change your circumstance and live more comfortably (expensively), there is no going back. So, enjoy living in your one-bedroom apartment in a great part of town and partying with your friends. Date, have fun, hell, get a job!

She moved into a much better apartment, and ate out every night. Partying a bit. It was only after she met her would be husband that they started buying awesome houses and extravagant gifts for one another. She could more than afford it.

Interestingly, because she'd lived the way she did for so long, her husband never knew how much money he was marrying into, so she was always very secure in that he married her for herself, not the lifestyle she could provide.

Whenever I get a higher paying job, I stay at the level I was before. I get one nice, non-frivolous thing and everything else goes into savings or investments, retirement. Over the years, sure, my lifestyle has improved. Isn't that the point of workng so hard? But, I always keep to that advice. So far, so good.

I also keep things forever. That is how you build wealth. I buy the highest quality, then watch the price rise 5 years later. My clothes and shoes last forever. I have 10 year old outfits that have held up beautifully. I do not do this with my sprouting children, however, except that I make sure the quality is high enough for hand-me-downs. I get 4 years out of a $150 winter jacket by buying big, so that DC1 gets two years out of it, then pass it to DC2 for another 2 years. Excellent quality, classic design.

Also, her dad once joked in passing that he never paid interest because he always paid in full before the month was over. I follow that to a T. There's only been once in all of these years that I simply haven't been able to, and that was for a major, sudden house repair, when several things in this old house failed at the same time. I did a 0% transfer and threw money at it.

She introduced me to the glory of compound interest, which I adore. Also, the joy and importance of philanthropy. I donate outgrown, great quality, clothing, books, and toys every year. Savvy tax move, indeed. I get returns regularly, in part, thanks to this practice.

Warren Buffet still lives in the $32k house he bought a lifetime ago. This may be a small house, but I am never leaving. I am constantly shocked by how many times people invest in new, higher cost housing, bit by bit. Closing costs, the stress, moving costs, new furniture, the renovations! Single person condo, newly-married condo, first family home, second larger family home, oy! Stay where you are until you simply can't possible make it work. In the meantime, save for that forever home, with all of its attending expenses (landscaping, housecleaning, heating systems, utilities generally, no handyman on hand to handle everything for free).

Learn from the truly wealthy, the billionaires who pay no taxes. How the hell do they do it? How might I scale that down to my humble space and earn from it?

Good luck!!![/quote]

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