One of the basic tenets of personal finance is to spend less than you earn. That sounds pretty basic and, may I say, even silly to have to point out, but many people live beyond their means.
It gets more complicated because you're taxed on what you earn, and taxed on what you spend, and even taxed on the returns of anything you may have managed to save!
So, if you earn $50,000, you may only keep $45,000 after federal and state taxes.
Then you can't buy $45k worth of goods, because of sales taxes. I live in CA with a 7.75% sales tax -- I would only be able to spend about $41,700.
My point is that if you live BELOW your means, you give yourself options to save or invest the difference. One of my best friends has a blog that deals with living a frugal lifestyle. I highly recommend a visit to her site, listed on my Important Sites list and also here http://frugalupstate.blogspot.com/. Enjoy!
Regards,
Trond
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2 comments:
Thanks Guy! I've added you to my bloglines account, so now I'll be able to keep up with you easily!
Well aren't you stating the obvious?
What about those who believe in living each day as though it was their last. :p
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