So the way I see it, there are two ways to get out of debt or to stay out of debt:
1) Spend less than you make
2) Earn more than you spend
Okay, so on the surface those might seem to be the exact same thing. But they really aren’t – and let me explain:
When I first started my personal finance journal I had 4 months of complete floundering. If you go back and read my entries from when I first started this blog you probably won’t even believe that I am the same person – but I am!
When I started this blog I was overspending my income by about $200-500/month. Some months more, some less. But I was ALWAYS going over what I made. Not only was I not living within my income, I was spending over it. I was eating out for lunch every day, buying ridiculous things. Whatever. The point of the matter is this: I was spending far more than I made.
So I thought the answer was really, really simple: Spend less than you make!
I tried this… and I read blog after blog after blog of people who do this. And you know what? I did reduce my spending. But I still was just breaking even or going slightly over each month. I started building an emergency fund, but would end up pulling money from it at the end of the month anyway.
Why? My living expenses were, unfortunately, kind of set. I had a two year lease on a apartment, fixed electricity bills (I always use energy saving bulbs), a set water bill, ect, ect… My standard of life was set. Sure, there were SOME expenses left to “give up” – but when I totalled in these savings – it was less than the $200-500 I was going over each month.
If I had continued just to “try” to spend less than I earned, I would still be in huge trouble. I would be unhappy. And I wouldn’t be making such huge strides towards financial recovery. I should mention, that after about 4 months of floundering with my “spend less than I make” plan – I eventually figured it out and from January 2009 – August 2009 I was able to live comfortably within my income paying $600/month towards my debt.
It didn’t take me long to realize that spending less than I earned wasn’t enough – in order to REALLY get out of debt – and in a time frame that I WANTED – I had to make more than I spent.
This is when I started picking up extra jobs. I started working at Tutor.com in September of 2008 and have pulled in quite a bit of extra money. But I knew that wasn’t enough. And in September I picked up two more jobs: private tutoring and teaching at the local community college.
Now, not only was I spending less than I made each month, I was also making FAR more than I normally spent. And instead of just putting $600/month away on my debt I could put $1,100/month away on my debt – OR MORE.
As you can imagine, my rate of paying off my debt has increased dramatically since I switched my philosophy.
So, this is my encouragement to you: If you feel like you’re not getting out of debt fast enough and there aren’t many other places in your life that you can cut down on your expenses – stop just trying to live under your means – instead try to make more!
This may be a small amount, like babysitting for a friend once a month. Or filling out surveys for $15-20/month.
Or it could be more substantial. If you are a crafty person, think about selling your crafts – or better yet, offer to TEACH someone how to do your craft. $20 for an hour of learning how to knit? I would certainly pay that! Or you could offer to tutor high school students who ate taking classes in your area of expertise. Or even, if you’re really great at fashion, offer to be a stylist for people. I’ve thought quite a bit about hiring someone to come in and take a look at my wardrobe and tell me what items I might need and who might go shopping with me to find new pieces that will bring it all together.
You know what your talents are – use them to make a little extra money!
The last few months have been incredible for me financially, and it is all due to not only me living within my means – but also making MORE money on top of that.
You can do it! – and get out of debt faster in the process. =)