Friday, December 30, 2011

My Focus in 2012: Living Within Our Means

Gail posted a great article found here that can help you determine if you are living within your means. Some of her benchmarks are as follows:
  • Are you saving 10% of your net income?
  • Are the balances on your credit cards or lines of credit rising?
  • Are you missing payments on bills?
  • Are you taking cash advances on your credit cards?
I know what my answers are to these questions, and it ain't pretty. We still have two cancelled credit cards with balances that we are paying down. Then there is the enormous tax bill I owe to Revenue Canada. That pesky overdraft has got to stop also.

For the most part, I'd like to think that we live within our means, but when gauged by someone else's measuring stick, maybe not so much. So I think what I need to do is to define 'Living Within Our Means' for our family. You know, the personal in personal finance.

I've set some financial goals for 2012. I would love to be completely out of debt in the next 12 months, but that is highly unlikely. I'd love to have saved up enough to buy a newer used vehicle, and to take my family to Disney World next winter, but I'm pretty sure that's out of reach too. Maybe if I can just make through to next Christmas with having put some money in my RRSP and being able to keep current on our bills, that will have made me feel like I've accomplished something.


  1. We are not saving 10% right now. Most of our money is going towards debt payoff, so I'm not too upset about it.

  2. Eboo, something I've tried to fathom from Gail is my pension plan from work included in this 10%. Because if my pension is included, I'm saving about 12% of my net income ( but I can;t touch the bulk until I retire in 13-18 years)...

  3. @ Sam: In Gail's book, Debt Free Forever, page 192, she says: "Whatever you get from your company pension plan reduces the amount you'll have to save on your own, so this is a big consideration."
    From page 205: " Save 10% means take 10% out of your monthly net income and put it in long-term savings like a retirement plan. If you have a pension plan at work, whatever goes into that can be counted toward your 10% long-term savings."

  4. Oh, I'm embarrassed now, as I own the book... I guess I missed that part! I think I need to reread it... Thanks!