I’ve long and often held the position that, even though we live in one of the wealthiest, most financially blessed countries ever, as a society, we also live a life of serious financial stress. I often joke that it’s probably less stressful to live in the rain forests of South America, hunting and gathering, than to live in our modern, tech savvy society, check to check. A lot of this stress stems from the fact that, as a society, we just don’t save money very well. According to a past Marketwatch article, almost 69% of Americans have less than $1000 saved! http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06. That is an astonishing amount of us that are basically one paycheck away from homelessness, or in the least, raiding our retirement funds in case of an emergency.
There are a plethora of reasons behind our insufficient savings habits, such as a lack of discipline and making good financial decisions. Maybe, it is simply that good jobs and hourly rates just don’t exist anymore for the lower and middle class (which I would argue as a legitimate factor). We can even rationalize that the value of the dollar just doesn’t go as far as it used too, therefore, neither will our paychecks. Regardless of the validity of these arguments, our financial habits have a direct impact on our ability to save and our overall financial well being, regardless of the inflation rate or our income level.
If you find yourself significantly stressed out over money, then there are several adjustments that can be made to alleviate that pressure and simplify your life. But it does require discipline and sacrifice, and a willingness to live with less. For example:
Do you we need that “Mercedes?”—many of us cannot legitimately afford the car parked in our garage, it’s possible we can’t afford the garage either. If you’re a year or two into your car payment and it exceeds 15% of your monthly NET income, NOT gross (we live off the NET), then it’s time to consider downsizing or getting rid of your vehicle! I have done this before myself, and although it’s unpleasant, it’s better than living in stress and worry. Fifteen percent doesn’t sound like much, but if your mortgage or rent is near the “recommended” limit of 28-30%, then almost half of your NET is being consumed by rent and a vehicle. The change is worth it! Alternative transportation, in the short term, could be used if available, such public transportation, occasional ride sharing with Uber or Lyft, and even carpooling to work. Considering your car is not upside down in value and you are diligent in saving in other areas, it shouldn’t take too long to buy a car outright, completely eliminating a car payment.
No cable- In my opinion, cable service is one of the biggest wastes of money. In the average household of 3-4 TVs, cable and internet services can run approximately $200/month, or more. I recommend having only internet and purchasing Roku or a FireStik, which have no recurring monthly cost. These “sticks” allow you to stream movies like Hulu or Netflix, or purchase programs or “apps.” I have recently done this myself, and eliminating cable alone is saving me close to $1500 per year.
Gym membership- these can easily cost $600-800 per year, depending upon how swanky the establishment and package that was chosen. With YouTube and DVD’s, it’s so easy to get a quality workout at home without having a ton of money worked out of your wallet (or purse). Eliminate the membership, not the exercise.
Side hustle-I have always been a huge proponent of a side hustle, or part time gig. During my transition of leaving corporate America to go independent, I also had a part time job while I built my practice. Even if you have a stable job or career, and feel you could save more, find a good side hustle. Something you may enjoy and make some extra cash while doing it.
If you are feeling the monetary strain, then by downsizing or eliminating your car, getting rid of cable and the gym membership, and finding a side hustle can have a dramatic impact on your budget. It takes a bit of courage, but one can literally transition living from check to check, to having a net surplus from $400-$1000 per month easily, depending upon your situation. If you are having debt and/or budgetary concerns and you want to make some positive changes, reach out to me at www.jdishonfinancial.com or firstname.lastname@example.org. If nothing changes, then nothing changes!