One of the most important aspects of personal finance is that we spend less than we earn. After all, the only way to accomplish spending more than you earn is by taking on debt. Since the economic crash I’ve seen countless articles give the finance concious a way to lower expenditures in hopes of paying down debt or simply to save more. Let me go on record by saying that I wholeheartedly agree with the idea of lowering your expenses. Many of you aren’t going to see an increase in salary year over year, nor are you likely to inherit a financial windfall, or win the lottery. If you want to paydown debt, or save more money, you are going to have lower your expense-income ratio as much as you can comfortably can. However, and this is what irks me, I’m tired of hearing about the low hanging fruit of your expenditures.
I can’t tell you how many articles I have read that tell us to cut back on our daily lattes. I suppose if you truly are buying lattes from a place like Starbucks every single day of the week, then yes it may be the first step in reversing some needless expenses. But I’m going to assume your closer to the average person, and that you probably don’t spend $4 a day on lattes, 7 days a week. You may buy a $4 latte one day, and a 99 cent gas station coffee the next day. In fact, you may be in debt, overspend, and don’t even drink caffeine at all…what’s the solution then?
The media has driven the gas price scare into us for years. I once even fell prey to the scare tactics and changed my driving habits. An article I read explained that we can all save a ton of money on gas by driving no faster than a consistent 60 mph, with our windows up, and preferrably the air conditioning off. I’m not an engineer, an automotive expert, or even more intelligent than the average person, but I’m willing to bet that the savings equate to pennies in a month. I tried this annoying slow, hot, and stuff method for about a month, and I dont recall having any difference in the amount I spent monthly in filling my tank. Also, I remember the suggestions of utilizing a work carpool, and using public transportation instead of your own vehicle. Great ideas, if you happen to live in one of the dozen metropolitan areas in the U.S where this is truly viable. I live in metro Detroit, we don’t do public transportation, though I wish we did. Not to mention I don’t punch into a clock, nor do I have a 9-5 job, I have more like an 8 – 8 job…carpooling isn’t easy to schedule when you work in a professional environment as a salaried employee.
Cutting back on entertainment options may be the one that gets me the most! For instance, canceling your health club membership. I personally think that we are more likely to exercise when we leave our home to do so, less distractions. I also think that we are more apt to exercise when we are paying a monthly membership at a gym. Frugality is great, but not at the expense of your health. What about eliminating your cable? Great! The very same article may be telling you to stop frequenting the movie theater and to rent movies instead, but what about just watching movie on cable? Isn’t cable a cheaper form of entertainment than going out on the town? Yep, I love utilizing the local library, but with spending cuts their selection of entertainment isn’t as vast as it once was, nor are the days and hours as accomodating.
I understand that these suggestions offer a glimmer of hope to people that are entrenched in debt, but abstaining from debt is truly the only effective solution at times. Buy a house with an affordable mortgage, that is perhaps smaller in size. You won’t have to waste your time reading about wrapping blankets around hot water heaters, and installing programmable thermostats, your utility payments will be less with a smaller home. Don’t buy a brand new BMW if you can’t afford it, and then you won’t have to worry about the gas savings by leaving your windows rolled up, and the air conditioning off, when its 90 degrees outside. Continue your education, do well at your job, build up ample savings, and you won’t need to worry about cutting $10 off your monthly cable bill and surrendering yourself to the selection of outdated movies at your local library. Yes, I do believe in spending smarter, but it’s those significant expenses that are inevitably going to weigh you down. In short, start with the high hanging fruit and work your way down, you’ll find life much simpler and more efficient that way.