When I run into people with financial troubles, I am at first sympathetic. I hate to see people struggling. But once I get to know more about the spending habits of those people, I start to understand how they got ino their predicament.
If you are worried about money, and you could take just one piece of advice from me, it would be to live within your means.
What does it mean to live within your means?
Living within your means is spending less money than you earn. If you earn $2000 a month, and you want to live within your means, you will not spend more than $2000. In fact, if you really want to live within your means, you will spend LESS than $2000.
If you are struggling with debt, you will never be happy. If you are constantly wondering how you're going to pay your bills, worrying that you don't make enough money, you need to change your lifestyle.
There are a lot of people who are doing the best they can. Single parents. People earning minimum wage in an expensive location. Unemployed people. But for even these people there is a solution. You have to change your lifestyle.
If your income changes, you must change. If you lose your job, you may have to sell your house, move to a cheaper apartment, move to a cheaper location, stop going to the movies, stop eating out, go the extra mile to buy the gas that's 10 cents cheaper per gallon, stop buying clothes and technology, cancel your cable.
There are plenty of ways to save money, or spend less.
My husband and I were spending $1700 a month on a 3 bedroom house and we don't even have any kids. Two months ago (June 2011) we sold our house for $50,000 more than we paid for it in 2008 and moved into a one bedroom apartment just 5 minutes from our old house. Now we're only spending $795 a month and we don't have to pay for water or trash (about another $100 savings). We are saving $1000 a month because of this move.
I used to lease a Toyota Corolla for $250 a month. This was because my 1997 Saturn SL2 was costing me $500 in repairs every month. So, switching from a breaking down car that was costing me $500 a month to a brand new reliable car for $250 a month was definitely a smart decision at that time, in my situation. However, my husband and I bought a '93 Ford Ranger for $1800 as a work truck a couple years ago, and when my Toyota lease ended, the truck became my main form of transportation. So we make no payments on any vehicle. Our Ranger has no air conditioning and it will eventually reach 100 degrees in the summer where we live, but I take a spray bottle in my truck with me on those days and spray myself with water and let the wind cool me down. No problem.
Sometimes you have to make sacrifices to survive. I get satisfaction out of these types of sacrifices, because when I really want to treat myself, I can. Because I am not living a luxurious lifestyle all the time, I don't ever have to worry about money, and sometimes I do go to the movies or eat at Red Lobster.
I am going to give you a scenario and tell you how I would live my life if I were this person. I am unmarried and I make minimum wage, which is $8/hr in California. That means I take home about $1224. I would rent out a 2 bedroom apartment somewhere east of the ocean (i.e. not by the beach), which could cost as low as $850 in cheaper locations. I would rent out one of those bedrooms to someone for $450. So I spend $400 on rent. That is about 1/3 of my income. I will save 10% of the money I make, which is about $120. The electric bill would be spilt between my roommate and I. I would implement energy saving strategies and request that my roommate do the same, or I will have to find a new roommate because, let's face it, I just wouldn't be able to afford it otherwise. Electric bill should not be more than $70 month, so that would be about $35 for me. If I have to live 20 miles from work (which happens often in California if you need to save money) it will on average cost me about 15 cents per mile, so going to work and back will cost me about $6 a day. 5 days a week, that's $125 a month on gas, and anywhere else I drive is pleasure, because if I need to go to the grocery store, I will do it on the way home from work, saving time and gas money. I will spend $8 per day on food, so that is about $240 a month. Normal cheaper cell phone plans are $45.
$400 Rent
$120 Savings
$35 Electric Bill
$125 Gas
$240 Food
$45 Phone
$965 TOTAL
That leaves me with about $259 extra to do whatever else I want to do with my money. Have cable/internet. Netflix. Go to the movies. Go out to eat. Have a student loan.
I personally spend $240 per month on my student loans, so that would take up almost all of my extra money. I would spend my extra $20 on internet because you can watch almost anything on tv with the internet, and the internet has so much more function than cable tv, plus it can make me money. TV can't make me money.
By living this way, after a year, I will have saved up $1440 and I never would have to worry about money all along the way, because I know in my mind that I cannot afford any extras. That is just the way it goes. But I would be happier than material things could make me, because I will not be driving myself into debt by using credit cards to afford a luxurious lifestyle.
This is a very positive article. I appreciate the advice it puts across. If we really want to save, we have to be contented with the little or the few that we can afford. Thanks for sharing.
ReplyDeleteThanks. I hope that others can benefit from this mindset. We don't always need the latest gadgets, or the fanciest cars, or the right clothing brands. If you simply have what you need, that should be enough. If you don't have what you need because you're buying things you want instead, I don't really think you have a right to complain. You have to have your priorities straight.
ReplyDelete