It’s Not What You Make – It’s What You Spend….
ByTwo years ago when I first started my blog I had a post that I wrote about money management and why it’s important to live below your means rather than above. In fact, you can see that post here Debt Free Internet Marketing. I know I run a marketing business and have products to help marketers and this isn’t the normal run of the mill post for me.
However, something caught my attention the other day. I was reading a post about how Nicolas Cage was going broke. If you donot know who he is, he is an American actor who has been in several dozen films and reports an income of about $20 million dollars per film. If he’s been getting paid that salary for the past 10 years and had at least 20 films during that time – well…. I’ll let you do all the math on this one. Basically, he’s made a fortune that most people will never even see a piece of.
The post which I was reading – you can read yourself right here when you get time. The author made a point I’ve been making for years to everyone around me – "It’s not what you make it’s what you spend." In today’s economy it couldn’t be more true.
Let’s look at something here. Let’s say you make $50k a year but you’re only spending $35k on bills and additional expenses (in total). That leaves you $15,000 to invest or bank. Now, let’s say your neighbor is making $300,000 a year but has all the fancy cars, goes out to dinner every night, has a $500,000 house and buys everything at will. Now let’s say your neighbor is spending $290,000 a year in total counted everything they’ve placed on credit cards. That leaves them $10,000 spendable money. You’re still ahead of the game at this point because you’re actually keeping and investing more money.
Now, you might look at above scenario and say the second person is gaining assets and really isn’t any worse off than the first person. However, what tends to happen is the more money you make, the more you spend. So the second person who was spending $290,000 per year realistically could eventually start spending $400,000 a year on that same income and in turn racking up major debt.
The problem becomes that eventually the debt causes more money going out than what is coming in. If, you were to run a business this way it wouldn’t be in business long and if you run your personal finances this way you won’t be living the dream for too long either.
I want to show you a way to keep what you’re making using your internet marketing skills. Let’s say you have a day job that pays you $30,000.
Let’s say you currently keep $200 per month after all your bills are paid, and expenses paid (this includes eating and groceries). That $200 should do 1 of 2 things.
#1. Invest it in your business. Use that money to buy better tools, better resources or even outsourcing.
#2. Save some set. Set back a budget for yourself or what you can spend and bank the rest.
#3. Skip eating out. Stay in. Go out once or twice per month instead of once or twice per week.
#4. Sacrifice now – benefit later. Skip all the luxuries now until you have your debts paid off. Then splurge a little once you have few debts. Using this method allowed me to pay off 2 car ($38,000) in less than 2 years.
#5. Wait on the vacation. Every year taking a vacation is nice but who really need to go into more debt for that? Take one if you can otherwise wait.
Honestly, the 1st option is my favorite. I love to reinvest in my business. If you’re working on growing yours it’s a wise choice. The more you invest now the less taxes you have taken out. This is money that would just be going away anyway.
This is a post I meant to issue 8 months ago and I just now got back to it. Anyway put this to good use and use these methods.
Feel free to let me know what you think or if you’re already doing some of these.
