Ask a person what is the single most important thing that
could happen to improve his or her financial picture and
the answer you'll get—in various gradations—is
a sudden influx of cash. Some of us wish for pay raises,
others want to win the lottery, and more indecisive types
just dream of a sudden windfall of cash.
Take an average family in an average neighborhood in a
small town that's earning, all together, about $60,000.
Chances are that family is whining about money and wishing,
possibly even praying (if they live in the Bible belt) that
they can earn more money. They probably even have an amount
in mind. If only, they will whine, we could earn $70,000,
we'd have it made! Even $68,500 would be enough! That would
be all it would take for us to be well off.
Meanwhile right down the road is another family in the same
general circumstances, and they're also moaning and
groaning about not having enough money. The thing is, this
second family already earns $70,000. But it's not enough.
They need $80,000, maybe even $85,000.
Whatever you earn, if you're strapped for cash right now,
chances are pretty good that some people in very similar
circumstances to yours are doing just fine with the same
amount you're earning.
And whatever sum you're dreaming about ... wake up! There's
somebody out there that fell into that much money and is
flirting with bankruptcy.
It's just as easy (maybe even easier) to go broke earning
$100,000 a month as it is to go broke earning $4,000 a
month.
If you're a typical American you probably wonder: how on
earth can you go bankrupt if you bring in $100,000 a month?
That's over a million a year!! How can you be anything but
rich?
You can go broke and it's not hard. Here's how. Spend
$101,000 a month. Believe me, that extra $1,000 can really
sneak in unnoticed when the income shoots up. That's why so
many lottery winners and movie stars and the "silly rich"
can wind up broke. When you only bring in $4,000 a month,
it's pretty hard to "make a mistake" and spend $5,000 since
you're probably counting your pennies.
Your financial health is made up of two things. Americans
fixate on one of them and ignore the other.
Part of your overall financial picture is your income.
That's true. I don't want to underestimate it. Your income
is vitally important. And don't get me wrong—more is
better when it comes to income.
But the other part of your overall financial picture is
what you spend. This is where Americans get glassy-eyed and
rub their foreheads.
Most of us act like we have control over our incomes
because we obsess about them and figure out way out of debt
based on income boosts. The truth is, you don't have much
control over your income.
Let's say you have a job. You really don't have much
control of what kind of raise you'll get. You can do a good
job, but if the industry suffers a downturn or your boss
doesn't like you or you make some career mistakes, you may
not even get any raise. The old adage that hard work will
bring you rewards really didn't mean that working hard for
a corporation guarantees you regular raises. You may not
get them.
You might think you could just find another job. That's
true. But the kind of job you can get depends a lot on your
education, skill set, and background as well as where you
live and the competition to nab those elusively rare
high-paying jobs. And let's face it, at some point, you max
out. If you're a world-famous brain surgeon working at a
world-famous brain surgery hospital you may be already at
the top of your game. You can't walk out and figure you'll
work somewhere else, because there may not be a "somewhere
else" for you.
But you do have a lot of control over what you spend.
Most Americans are mystified by that. They see debts and
expenditures as things that "just happen." It's true that
you have to pay rent, buy food, and pay your taxes, but you
have some leeway in the first two items. When it comes to
entertainment, clothing, and vacations, your control zooms
off the charts.
I've seen people spend money on things as if they were
zombies. A family in five-figure debt took an expensive
vacation one year and ended up getting dunned by collection
agencies because they let some of their already festering
debt fall into worse arrears than previously. When I asked
them why they went on an expensive vacation that year, they
seemed stunned.
"It was summer. We always go on vacation."
Young women feel that it's their birthright to have
designer jeans and expensive handbags, not to mention big
name shoes. College kids who wait tables to buy books will
put a spring break fling to Mexico on plastic. Why not?
They're entitled!
That entitlement mystique has created the mistaken sense
that our expenditures are uncontrollable. They're not.
You can trim your budget by 10% easily, without even
feeling anything. Most of us can save even more by making
conscious decisions and adjustments. And it's possible for
zealots to cut expenses radically without giving up a
decent lifestyle.
If you cut your expenses by 20% (a good target, by the
way), that's like getting a 20% raise. You can't reasonably
expect your company to give you a 20% raise, but you can
give one to yourself!
What's more, frugality is not necessarily a program of
hideous deprivation and austerity. It can be creative,
engaging, and fun. It forces you to do things differently
and many people struggling with debt and "low incomes" are
often struggling in other areas.
Here's what I mean. You may feel like your life is out of
control and you dream that a bigger income would "fix
things." But then you decide to start saving money. You
give up cable TV and going to the movies. This forces you
and your family to interact a bit more. You start playing
ball in the park after work or board games at night.
I've heard of restaurants-only couples who went on
frugality plans who discovered that cooking at home was not
only fun, they ate healthier food. The couple loses weight,
finds a hobby they both can enjoy, and learns (here's a
surprise) that it's really no more time consuming to cook
regularly than to eat out.
Money-saving strategies may encourage you to take up
sewing, start a garden, or bake your own bread ... but many
people find they enjoy these things.
Not only that, frugality is a good incentive to proper
work-life balance. Most of us get into the debt whirlwind
because we're living too much in the work zone. (Work is
expensive! It requires gas, clothing, day care, and all
sorts of special services to permit us to log those long
hours.) Frugality is going to force you to spend some time
at the home front.
And when it saves you money, you realize you not only can
afford to spend more time at home with the family, you
can't afford not to.
----------------------------------------------------
Whether you're already a froog or just want to embrace the
frugal lifestyle, visit
http://www.livebetterspendless.blogspot.com . If you're
digging out from debt, don't despair. You can find all
information (no selling) at
http://www.debt-consolidation-diva.com .
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