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Loading ...While learning to earn more can go hand in hand with getting out of debt, it works only if you use the extra money you earn to improve your financial situation, rather than just to spend more. As you’re getting out of debt, don’t count on a big raise to take care of all your money problems. Ultimately, the hard work you do to learn to live on what you earn now will pay off in more ways than one. More money just means more money problems, if you don’t know how to handle it.
Putting More Money in Your Pockets
There are lots of ways to increase your income. You can improve your salary at your current job, or in your current field. You can take on another job. If you have a family, you can put a non-working spouse or child to work. You can increase the amount of money you take home from your current job by using smart tax strategies, or you can invest your money to make more money.
Your Current Job: What’s holding you back from bringing home a bigger paycheck? Your education level? Your company’s size or structure? The field you’re in? Or could it be because you have trouble asking for what you deserve? Your job is to find out what the problem is and try to see what you can do about it.
Training and education usually offer some of the best payoffs. The numbers show that the more education you have, the more money you’re likely to make and the less likely you are to be unemployed. Lots of companies offer educational opportunities and will pay for you to improve your on-the-job skills. Consider local community college courses if your firm won’t pay for additional training. You can often find inexpensive, practical courses aimed at business professionals. In addition to improving your worth to your company, you can also boost your self-esteem by “mastering a new area or skill!
Moonlighting: Don’t berate yourself for not working two or three jobs to make ends meet. If you already moonlight, don’t feel guilty because you hate it or are burnt out and want to quit. Moonlighting is often counterproductive, because you feel so bad or tired after working two jobs that you end up spending all the money you make on things to make you feel better.
There is one case where moonlighting can make a lot of sense: if you use it as an opportunity to pursue something you really enjoy doing (or think you might enjoy doing). If you love to paint and you moonlight teaching art classes, you will be doing something you like, and it can be emotionally and psychologically, as well as financially, rewarding.
A few months of flipping hamburgers after work, on the other hand, will probably leave you exhausted and frustrated. Worse yet, you may be so resentful at having to work hard with little to show for it, that you’ll probably start overspending again to make yourself feel better.
If you decide to take on a second job, don’t look at it as a punishment for not having enough money. Sometimes you just gotta do what you gotta do. But if at all possible, try to choose something that will let you learn a new skill, profit from a hobby, or explore a potential new career. If you’ve always dreamed of owning a restaurant, for example, you could moonlight as a waiter. Don’t just wait on tables, though. Treat it as a research project and ask a lot of questions. You may even find you hate that business—but isn’t it better to find out, rather than torturing yourself with “if only” questions?
Tightening the Belt
If you have a family, you can hold a contest to see who can come up with the best money-saving ideas. Offer rewards that cost very little or nothing—a trip to the beach, or a day of being “waited on” by the family, or cooking their favorite meal, for example.
Here are some ideas from some of the major categories to get you started:
Cutting Car Costs: Whether you drive a clunker that gets you to work and back, a wagon to haul the kids to tennis practice, or a sports car that always shines like a mirror, your auto represents a big investment—probably much bigger than you realize.
The American Institute for Economic Research (AIER) estimated in 1989 that the average cost of owning and operating a standard-sized automobile over the course of your driving lifetime is over $200,000. That’s just for one auto. Take a family with two or three cars, and you can easily see why automobiles are an enormous financial investment.
There are a number of ways you can save money on transportation. You could:
- Trade down to a cheaper or more fuel efficient car.
- Do your own simple auto repairs.
- Shop for cheaper car insurance.
- Start carpooling to work several days a week.
- Check tire pressure to save gasoline.
- Don’t pay more for a higher-grade gasoline than your car needs (a complete waste of money).
Taking a Bite out of the Food Budget: For some people, the thought of clipping coupons and buying generic is more than they can stand. Would you become a smarter shopper, though, if it meant you could put as much as $1,000 into your family’s coffers each year?
As you monitor your spending for a month, you’ll probably find you’re spending a lot for food. You’ll probably also find that short stops at the convenience store for a gallon of milk end up costing you $20 by the time you add on little impulse purchases! In fact, some 66 percent of grocery purchases are impulse purchases.
Some of the best budgeters recommend these steps for cutting your grocery bill:
- Start making shopping lists and sticking to them.
- Cook more than you need for meals and freeze the leftovers for future meals when you’re too tired or rushed to cook,
- Take your lunch to work.
- Compare prices on no-name brand items.
- Consult Consumer Reports for the names of best-buy products. Sometimes more expensive products are so much better than the cheaper versions that they save money in the long run.
- Keep a small notebook to compare prices at your favorite grocery stores. When you see something on sale, you can refer to your list to see if it’s really a bargain!
- Stock up when items you usually buy are on sale. You’ll get them sooner or later, and later may mean at full price.
- Keep a running list on the refrigerator so everyone can note what they need and so you won’t run to the store every time you forget something.
Become a Savvy Shopper: Try shopping sales, flea markets, and discount stores. A few really good buys, and you may be hooked on bargain hunting.
Taxes: It’s very important to make sure that your employer is not withholding too much from your paycheck. Tax refunds may be great, but you’d save a lot more by taking that extra money with your paycheck and using it to pay down your credit cards. If you are not sure that the proper amount of taxes is being withheld from your paycheck, see your company’s personnel manager or accountant. Alternatively, the IRS publishes tax tables that (maybe) can help you figure it out on your own. Call the IRS at: 1-800-TAX-FORM for the appropriate publication.
Medical Bills: If you have excellent health and dental insurance, consider yourself lucky. As we’ve seen lately with all the debate about health-care reform, many people don’t have adequate health insurance and are forced to put off routine medical care until they face expensive major illnesses.
For many people who aren’t eligible for comprehensive health coverage, unexpected doctor bills can mean bankruptcy. Surprisingly, medical-care expenses are often negotiable and doctors’ fees are not always etched in stone. If you have a health-insurance policy that requires you to pay part of your bills, find a doctor who is willing to accept what your insurance pays as payment in full. Your insurance company may be able to provide a list of doctors who accommodate those requests.
Decide What’s Really Important: Admit it: How many times have you gone to the shopping mall because you didn’t have anything better to do? Or blown $20 at the movies because you just needed a few hours of escape? If you’re really unhappy in your job, your marriage, or whatever, it may very well affect your money life. Everyone knows someone who overspends because of some other problem in his or her life.
One of the best ways to cut spending is to find inexpensive things you really enjoy doing. Take some time right now to make a list of at least twenty-five things you can do for under a couple of dollars. Again, if you have a family, make a list together. If you can’t think of at least twenty-five things you like to do, then start listing things you’d like to try. Put that list on the refrigerator and consult it every time you’re tempted to wander the shopping mall.