Hello Forevercashers, and welcome to Forever Cash Friday! Woot woot!
For this weekend, I have a special challenge for you: to reduce your monthly living expenses.
The bottom line is that by lowering your expense load in a smart way, and by following the Wealth Wheel process, you can have the same lifestyle, but you need to earn much less.
The fastest way to get there is:
- Stop digging yourself deeper into the expense hole.
- Increase your earnings as quickly as you can and use some of that to get out of the debt spiral.
Deprivation is not the key. If any financial advice is not enjoyable, it is perceived as difficult. If it is difficult, then people won’t keep it up long-term, and they will eventually fail. It’s like going on a diet to lose weight long-term. Long-term diets just don’t work. What does work is doing a little bit of the diet, cutting out the worst foods most of the time and the bad foods (but not as bad as the worst) many times (equals playing defense by reducing the bad elements) but counteract that with physical activity to burn more calories (equals playing offense by actively burning more calories). What’s required is not a diet, but a lifestyle change.
It’s the same here. If you cut up your credit cards, get rid of your cell phone, sell your Mercedes and buy a twenty-year-old rusty Chevy, move from your nice apartment to a shack in a dangerous neighborhood, and instead of eating out four times a week you cut it to once per month, you will absolutely be able to save a lot of money. You will probably save a few thousand dollars a month easily, which you can apply to your investments. It takes a special kind of person, however, to be able to do that. It is not the path for most of us. Chances are that you will feel miserable living like that. You will feel like all the life juice is being sucked out of you.
You could opt to go longer term but simpler changes:
- Change your cell phone provider or change to a cheaper plan.
- Check to see if changing cable provider will save you money.
- Check to see if you can get a higher deductible on your car, if you are a safe driver.
- Adjust the house thermostat when you leave the house.
- Keep your car a few more years once it’s paid off.
- If it is not paid off, think about trading it in (if you have equity in it) for something that is good-looking and that you can pay for with cash from your car equity.
And if you are up for it and take this seriously, you might want to look into making some more serious self-evaluations:
- Do you even need a third car?
- Do you need to live in a four-bedroom house alone? Or can you get a roommate to help reduce the cost of having the house?
A friend of ours just bought a house that costs him $1,200 a month. He found two roommates who each pay close to $450, meaning our friend just has to cover $300 per month to break even. Yet, he gets tax benefits and the increasing equity in the house.
Getting in financial control of your life is not just about cutting up credit cards; it is about managing your money differently.
That’s your challenge. Now get to it! I want a full report come Monday!