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“You can get past the dead end. You can break through the ceiling. I did and so have countless others.”

Finance Tip Friday #19: Increase Your Income by Decreasing Your Expenses!

Money Flying Coin Away Hand  - mohamed_hassan / Pixabay

Many people become fixated on increasing their overall income by working more or generating more income in their business. While this is optimal and I definitely recommend increasing your income as much as you can (fastest way to financial independence), you still need to ensure you are controlling the expenses in your life. Lowering your expenses = INCREASING YOUR OVERALL INCOME!

What happens with most people is that they increase their income and then increase their living expenses. They decide to buy fancy new cars, big expensive houses, designer cloths, and so forth… They get “lifestyle creep.” The increase in income is essentially just a wash. They have nothing to show for it. They are still in the same place: living paycheck to paycheck. This is not optimal, and it is a recipe for being a wage slave throughout life and never being FREE.

One of the FASTEST ways to increase your income is by LOWERING your expenses. It is an instant raise! People do not take the concept of living below your means seriously. In fact, the majority of Americans are cash strapped and live paycheck to paycheck, INCLUDING NURSE PRACTITIONERS!

If you want to obtain financial independence in the shortest amount of time, you must get your expenses under control. This is hard, I know… I was essentially living paycheck to paycheck, overwhelmed with debt, and feeling like I was never getting ahead. How did I fix this? By getting my expenditures under control. Once I lowered my living expenses, I instantly gave myself a raise. I was able to aggressively begin paying off debt and investing appropriately. If I had not lowered my expenses, I would still owe $80,000 in student loans, have an expensive car payment, and so forth. Within 3 years I went from being in six figure debt to having a very healthy POSITIVE net worth. This would have been impossible if I had not controlled my expenses.

I challenge everyone reading this to look back at your credit card/bank statements last month and do a quick tally on where your money went. Where are you spending a lot? Are there expenses that are fluff and unneeded in life? Can you skip the morning Starbucks? Can you skip going out for lunch every single day? I GUARANTEE you there are expenses in your life that are a total waste of money. I did this and found out I was spending like $2,000 a month eating out! I quit that and INSTANTLY gave myself a $20,000 a year raise! Think about that! Not only did I save myself money, but I also eat healthier, feel better, and look great! A WIN-WIN!

Put this into perspective: one $5 coffee every day = $1,825 a year. $1,825 a year x 10 years = $18,250 (closer to $25,000 in all reality if you factor in inflation). $25,000 invested into a moderate risk stock market portfolio would result in $40,000 over 10 years. Imagine if you cut out a few more “$5 here and there expenditures” in your life. In 10 years, you could have easily saved, invested, and earned $200,000! Now imagine if you cut out the bigger fluff in your life: expensive cars, McMansions, designer cloths, going out to eat regularly, etc… You could literally increase your income over a 10-year period by $1,000,000.

So, the question you need to ask yourself is this: What is more valuable? My time? Or my outwardly appearances? I can tell you right now that very few, if any, people around you or in public care about your expensive car or designer cloths. Instead, don’t you want to have more of the most precious resource in your life: time? Time = freedom. To get more time though, you need more money and to lower your expenses so you don’t have to be a slave to your employer or even your own business.

Therefore: lower your expenses > see an increase in your income > see an increase in your time > see an increase in your overall joy in life!

3 Responses

  1. Do you have specific tips on reducing debt. I like the Starbucks example, but don’t waste money on Starbucks. I have $140k in student debt, 3 car loans, a mortgage and one kid in college out of state. I make good money but am completely strapped not to mention have zero time.

    1. The snow ball and avalanche methods of paying off debt AND living below your means… it is the ONLY way to get out of that sort of debt load… Look up those methods.

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