We think we work to pay the bills. But the truth is that most of us spend more than we make on more than we need, which sends us back to work to make more money, which we then spend to buy even more stuff than we need. On and on it goes like one big, fat, expensive vicious cycle.
So here you are, well into a new year, determined to improve the quality of your life by living at your means. The task at hand seems perfectly clear — you need to find more money. You have two choices: Increase your income or reduce your spending.
Making more money does seem like the most logical way to fix a financial problem. But there are limited ways to do that.
BEEF UP YOUR PAYCHECK. You can ask for a raise. You can land a new job that pays much more than your current job. Or you can get a second (or third) job to supplement your income.
SELL YOUR ASSETS. A good option, perhaps, if you can find a cash buyer for your grandmother's sterling silver or sell any real estate that you own.
LAND A WINDFALL. You can win the lottery, receive a large inheritance or befall some other stroke of luck. I suppose any of these things could happen, but I wouldn't count on them being realistic options for changing your financial picture. You have a better chance of being struck by lightning than winning the lottery.
All of these are ways to increase your income and improve your finances. But let's get real. If you could do any of these things, you would have done them already.
While increasing your income is a way to change your financial picture, the change may have negative effects; It could push you into a higher income tax bracket or prompt you to go more deeply into debt.
A smarter way to improve your financial picture is to systematically, methodically and intelligently reduce your spending. For example, if you are currently spending $1, you need to find a way to reduce that to 80 cents (unless you live below the poverty line — in which case you have a different set of challenges).
I am confident that with persistence you can reduce your spending. You can. This approach will have all the positive effects of increasing your income without the challenges mentioned above.
INSTANTANEOUS. Reducing your spending brings instant gratification. For example: Normally, you spend $140 on groceries each week. This week, spend $100 and you will have $40 left in your wallet for some other use. You'll have no loans, no debt and no taxes. That $40 has already been earned and taxed. It's yours.
LESS STRESS. Assessing the ways you spend your money forces you to focus on what really matters. You begin to notice unnecessary baggage. You're more willing to acknowledge what brings you joy, what needs to go and how to create the life you love.
MORE CONTENTMENT. Thinking about what is meaningful to you and then having the courage to change your spending habits accordingly will bring a sense of contentment to you and your family. Overindulging in unnecessary things clutters your life and can cause stress. Instead of being concerned about getting everything you want, you'll be content with what you have.
I hope these solutions make you excited about what can happen in your life when you begin to live simply and according your means. And if you've already begun your journey, I hope to inspire you in the coming months and year to do even better!
Mary invites questions, comments and tips at [email protected], or c/o Everyday Cheapskate, 12340 Seal Beach Blvd., Suite B-416, Seal Beach, CA 90740. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of www.DebtProofLiving.com, a personal finance member website and the author of "Debt-Proof Living," released in 2014. To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.
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