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Live Your Life ... For Half the Price!

  • Mary Hunt <i>The Cheapskate Monthly</i>
  • 2005 2 Feb
  • COMMENTS
Live Your Life ... For Half the Price!

You need more money. You need it now. So what are you choices? You have two: You can increase your income or you can reduce your spending.

Most people when offered these two choices will opt for increasing their income. More money. That's what everyone wants, so for a moment here I am going to assume that would be your first choice, too. I completely understand that. You don't want to disturb your lifestyle. You don't want to confront anything you've done in the past, you just want to get caught up so you can breathe. Here are your choices for how to get more money:

Increase income

Get a bigger paycheck. You can ask for a raise, you can land a new job that pays a lot more than your current job or you can get a second (or third) job to supplement your current income.

Win The Lottery. I mention this in case it is on your secret list of realistic options for changing your financial picture. While this is an option, I would not suggest you rely on it as a way to increase your income. Your chances of being struck by lightning are much better than winning a lottery.

Sell Assets. Finding a cash buyer for your grandmother's sterling silver, the boat, all of the clothes and household items you never use, a piece of real estate or other asset you own is another option for increasing your income.

All of these are ways for you to increase your income and to improve your financial picture. But let's get real. If you could do any of these things you would have done it already and we wouldn't be having this conversation.

While in theory increasing your income is a way to change your financial picture, it is not always easy or effective for several reasons.

Higher expenses. Let's say you ask for that raise and (Surprise!) you get a nice annual increase of $5,000. You do know you'll never see the entire $5,000, right? And what you do see will be in small increments. And I hate to be the bearer of bad news, but that could push you into a higher tax bracket.

Once your very impressive raise is subjected to taxes and other withholding, you'll be lucky to see $60 in your weekly paycheck. Ditto if you work overtime. And, if I can point out one more fact, even if you can start working overtime or arrange for that raise to be effective today, it will take several weeks for you see any of it. But additional expenses like additional childcare, gasoline and other expenses related to being away from home will kick in immediately.

Improved lifestyle. There's something odd that happens when you get a big boost in income. It comes with increased feelings of entitlement. Suddenly you deserve a new outfit, a larger house, better mobile phone, a newer car, a great vacation, better birthdays and bigger Christmas. You may discover after you've bumped up your entitlements that your $60 a week increase doesn't go far. In fact, your increased income can put you farther behind.

Old habits. Let's say that you can find a way to increase your income sufficiently to improve your financial situation. Not bad. But here's the problem. Just exactly what caused those money problems in the first place? Overspending? Too much credit card debt? Your newly enhanced income may do little more than stick a financial Band-aid on a pile of bad habits. If you fail to address them, nothing is going to change. In fact, statistics suggest that more money will only make your problem worse, not better.

Let's say you decide $5,000 looks like a down payment on a vehicle upgrade. You could sure use a mini-van and you have all kinds of safety and convenience issues to prove your case. So you do it. You haul off and buy a great new-to-you van with monthly payments of only $269. Of course you do this before you see that $5,000 boils down to $60 a week. You've just worsened your financial situation with new debt and a monthly payment that exceeds your net increase.

Reduce spending

The other way to improve your financial picture is to systematically, methodically and intelligently reduce your spending. Unless you are living below the poverty line, I am confident you can reduce your outgo without giving up the things of life that are most important to you.

Instant effect. When you reduce your expenses, the effect is instantaneous. Here's an example: Let's say you normally spend $140 a week at the supermarket. This week you spend only $100 but come home with the same kinds of food you normally purchase. This means you have $40 tax-free in your wallet for some other use. No waiting and no begging; no loans, no debt, no payback. It's your money that has already been taxed.

Every expense you have-not just your grocery tab-is a candidate for some type of systematic reduction.

Less stress. Reducing your expenses will have a more far-reaching effect than just the balance in your bank account. Stepping away from conspicuous consumption allows you to see the bigger picture. Assessing the way you spend your money forces you to focus on what really matters. You begin to notice unneeded "baggage," you're more willing to acknowledge what brings you joy, what needs to go and how to create the life you love that discourages chaos while welcoming simplicity.

More contentment. Throwing conspicuous consumption into reverse has a calming, even cleansing, effect on adults and kids, too. Overindulging in stuff complicates life and causes much stress. Examining what is meaningful and then having the courage to confront the rest brings a sense of contentment to you and to your family. Instead of being so concerned about having what you want, you'll find contentment in wanting what you have.

I'm sure this will come as no surprise to you that I'm heavily partial to reducing spending over increasing income as the preferred way to improve your financial situation. And you knew that all along. The title of this article gave it away.

The solution

Current figures are in and they're not pretty: The average American is spending $1.22 for each $1 of income. If you're average you're in trouble. You are digging yourself into a horrible pit of debt.

The key to achieving financial freedom is to live below your means. One of the fundamental principles of the debt-proof living plan is the 10-10-80 money management formula. For every dollar that flows through your life you first give away 10 percent, you save 10 percent and you limit your overall spending required to fund your lifestyle with 80 percent of your income. Impossible? No. It takes skill, effort and determination. It takes desire and commitment to live below your means-without giving up your style and your quality of life.

It is not realistic to think you will never pay full price for anything or that everything is available somewhere for just pennies on the dollar. But if your goal is half-price and you are willing to work at it you can drastically reduce your expenses without sacrificing the aspects of your life that mean the most. It will average out over time.

This is a mindset, an attitude.

Don't worry that you're going to lose your dignity. In fact, no one needs to know about your new resolve to find ways to drastically cut your expenses. You don't have to print "I'm Cheap!" on your forehead. A better option is to engrave this motto on your mind: Wherever I am, whatever I do, there is a way to do it for less.

Half-Price tip

Erin Margain of California has uncovered a pretty amazing bargain. She and her family are partial to the Progresso brand of canned soups. If you know your canned soups you know Progresso is considered gourmet, a cut above the competition and quite expensive in most supermarkets. Her half-price solution? Target.

Target. The regular price for Progresso soup is in the $1.60-a-can range depending on the variety and where you live. That is the everyday price and a remarkable bargain.

Walgreens. Further research reveals that Walgreens also carries Progresso soups, albeit with a limited selection, but still much cheaper than the supermarket. The regular prices ranges from $1.99 to $2.49 per can.

On sale with coupon. The Progresso line of soups goes on sale in most supermarkets from time to time, for about $1.50 a can. Add a coupon ($.75 off when you buy 3 cans is typical for Progresso), can bring that price down to $1.25 per can. And if your store doubles coupons that drops it to $1 per can.

Supermarket sale prices when combined with a coupon usually are the cheapest way to go, as demonstrated above. But you have to be at the right place at the right time, have the right coupon and the means to buy enough to last to the next sale. Some stores impose limitations, many do not double.

The secret to living your life for half the price is finding ways to reduce all of your expenses ... even the soup!


© 2005 The Cheapskate Monthly. All rights reserved. Used with permission.

 "The Cheapskate Monthly" was founded in 1992 by Mary Hunt.  What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt.  Today, "The Cheapskate Monthly" is read by close to 100,000 Cheapskates.  Click here to subscribe.