Living Within Your Income

This chapter really gets to the heart of the issue. Without resolving to live within your income, there is no way that you will ultimately be successful in money management. You will experience so many ups and downs in your financial situation that you will feel like you are on a roller coaster. Even if you are able to juggle things for a time, even for years, you will eventually reach a point where there is nothing to do except cut back on your expenditures and cut back drastically. All of the spending that you have done over and above what you could afford will now have to be paid back with interest. You are likely to end up without adequate resources to meet any of the goals that you have set for yourself.

You need to understand that living within your income does not mean that you are permanently deprived of the things that you feel that you need to enrich your life. In fact, if you go about things in a systematic way when it comes to putting your financial life in order, you will actually enrich your life in the process and will accomplish your goals much quicker than would otherwise be the case.

The sixth principle of A Disciple’s Generous Response states that a disciple spends responsibly as a commitment to live in health and harmony with God and the world. As has been stated above, living within your income, spending responsibly, is critically important.

The first step is to take a look at unneeded items that you may have. At one time they seemed important enough to buy and you thought that they would be used enough to justify the expense but if that has not proven to be the case, consider selling them. If you are renting storage space to store them, do more than just consider selling them. Reduce what you have to the point where you no longer have to rent a place just to hold it all. Then, save some money and don’t rent the space any more.

Regardless, convert unneeded items to cash and use that money to reduce your debt load. Resolve that until the debts are all paid, you will not be acquiring additional items such as the ones you may have just sold. Shop sparingly and effectively by getting only those items that you need and will use enough to justify the cost.

About 150 years ago, it took about half of one’s earning or efforts to provide a family with the food they needed. This has declined steadily as we have become more efficient at growing and distributing food and now it only requires about ten or twelve percent of our income to buy the food we need. It would be even less if we didn’t eat out so much and bought all or most of our food at the grocery store and prepared it at home. Today, relatively few of us are directly engaged in growing food for a living and rely instead on those who do and a pretty amazing distribution system to provide us with what we need. Even with the decline in price mentioned above there are still significant savings to be realized in this area of expenditure without sacrificing quality. All it takes is a little planning and forethought.

Beyond shopping from a list and not shopping when you are hungry, there are several other things that you should know that will save you a lot of money over the course of a year. First, be aware of how stores are laid out. They tend to put the most expensive items about chest level so that you will see them first and toss them in your cart without taking a look at what is on the shelf below your knees or above your shoulder. Often, you can find much better pricing in those areas. Also be aware of where they tend to put the things that you will be buying several times a week like bread and milk. They tend to put them in areas of the store that require you to walk down aisles stocked with some of the most expensive items in the store. Stick to what you came for and you should do fine.

Give consideration to buying more fresh fruits and vegetables, especially when they are in season in the area where you live. The prices at those times tend to be excellent and even at other times of the year when they are shipped in from other parts of the world; they tend to be a better value than processed foods. Make sure that you buy the foods needed to prepare the menus that your family enjoys. Don’t stock up on things that you tend not to use.

Be aware of the best deals on nonfood items that can often be purchased at a drug store or department store for a lot less than you will find yourself paying at a grocery store. Use coupons wisely. You should compare the after coupon price with the regular price of quality generic products or with the price of the store brand.

One of the best long-term strategies that you should consider is refinancing your house when interest rates drop. You can lower your monthly payments by hundreds each month and use that money for other purposes and goals that you have. When interest rates drop below the rate of your current mortgage, you need to be ready to act. A little bit of preparation at this point can literally save you thousands of dollars in interest over the life of a loan.

Refer to the chapter on housing for more information on how to save money through refinancing and for some guidelines on how to decide if it is worth the cost for you.

You need to take a close look at all of the things that you spend money on. Take a look at your entertainment dollars. Are you going to first run movies or are you willing to wait a little longer and see it for a lot less (or even rent it when it comes out on DVD)? Reexamine all of your memberships and magazine subscriptions. If you are not using the memberships enough to justify the cost, cancel them. If the magazines just sit around until they are old enough to throw away, write to the subscription department and cancel it. At the very least reexamine everything when it is up for renewal.

Watch your communication costs. It is possible to save considerable amounts of money by consolidating your telephone, long distance, Internet and cable bills. Make sure that you only pay for what you use on a regular basis and keep current on what is being offered by providers, including your own.

In recent years credit cards have become more than just credit cards. They now offer a whole range of benefits including cash back bonuses and frequent flier miles. Often you can have additional benefits without having to pay a yearly fee. Get a credit card that does not require a yearly fee. Never charge anything beyond what you can pay off each month from current income and enjoy the benefits attached to the card. It won’t amount to huge amounts of money at any time but every little bit helps.

Energy costs continue to be an important way to save money. Appliances have become more energy efficient over the years, as the cost of electricity has declined. However, when you add up all of the appliances that use electricity that were not part of your household, the size of your bill may have increased. Look beyond turning out lights to the big-ticket items and monitor the way that you heat and cool your home. A simple setback thermostat will allow you to heat and cool when you know that you will need it but will not require you to constantly be adjusting your thermostat manually. Over the course of a year it can make a big difference.

Take some time to understand all of the benefits that are available to you at work. It is increasingly common to have choices in how you cover yourself and your family in the critical areas of insurance and even how you prepare for your own retirement. Take advantage of every benefit when it is in your best interest. For more on this, look at the chapter that deals with two incomes. There are ways to coordinate benefits so that you actually do better than if you don’t take the time to plan how to use your benefits.

The emergency fund eventually becomes a place to get a small “loan” when you need it. This will mean that you are not borrowing money at a high rate of interest when you need it and your payments back to the emergency fund will be lower than the payments associated with just about any loan because there will not be an interest charge.

This by no means sums up all of the things that you can do to manage your income. Pay attention to the web sites listed below and implement the ideas that you find there that make sense for you. Remember that it is very satisfying to live within your income and ultimately your either do that or find yourself hungry and broke.

WEB SITES:

http://www.cheapskatemonthly.com/
http://www.ourfamilyplace.com/budget.html
http://www.kathleengurney.com/
http://www.personalfinancebudgeting.com/family_budget.php
http://www.stretcher.com/index.cfm