Decrease Your Costs to Increase the Quality of Your Life

"There are more advantages to decreasing costs than increasing income." -- Anonymous

Most people spend everything that they earn. Some spend more than they earn by using the deceptionally convenient credit card. If someone makes $3,000 a month and spends all of his money, then gets a new job and earns $6,000 a month, he'll still find a way to spend all of it. If he keeps it up he'll then start buying things on credit, and spin down the debt drain.

When you spend everything that you earn, or if you buy things using credit too often, you are robbing yourself of freedom. If you don't have control of your finances, then it will have control over you.

On the other hand, if you spend less money than you earn you'll always have money (as long as you continue earning and don't have a major crises), you'll have financial piece of mind, you'll have much more control over your life (and therefore you will have more freedom), you won't be at the mercy of bosses and creditors. When you decrease your costs, and spend less money than you earn, it's like giving yourself an instant pay raise.

Remember MC Hammer of "U Can't Touch This" fame? He amassed a fortune of $33 million US dollars. $33 million dollars is a lot of money. What would you do with it all? Here's some of what Hammer did with it:

* He spent $12 million dollars on his home. Some of the things it had were a 17 car garage, basketball courts, Hammertime underpants (gold-plated), a 33 stadium seating theater, Italian marble floors, tennis courts, a baseball diamond, waterfalls, ponds, aquariums, a bowling alley and the list goes on and on...

* The rest of his money he used to spend on important items like 17 very expensive automobiles, thoroughbred racehorses, huge parties, antiques, a leased Boeing 727, 2 helicopters and a staff of over 300 people (many of whom admitted that they weren't even told to do anything).

Sound pretty cool? Well I suppose it was until he filled for bankruptcy and lost everything.

Hammer spent more money than he made, and he made a lot. So it really doesn't matter how much money you make, you can always squander it. You will be broke if you spend it all.

How To Decrease Your Costs

Make a list of everything you spend money on, no matter how small. List all of your living expenses (food, car maintenance, water, electricity, cable, rent, phone, internet, taxes, gas), and anything else you spend money on (clothes, going out, education, gifts, credit cards, magazine or newspaper subscriptions). Make sure that you include absolutely everything you spend money on, every last bill.

Decide what things are totally unnecessary, what you are just wasting money on. Then get rid of them. Give it away. Decide to stop spending money on it. Eliminate it. Borrow books from the library. Unsubscribe from your newspaper and read it online. Cut cable. With each expense you eliminate cross it off your list.

Now take a look at your other expenses. Next to the expense write down how much money you spend on it each month and try to cut back on it. You might sell the car and buy a bike, or take public transportation (selling your car can eliminate huge gas prices, insurance, repairs, parking fees and any traffic tickets). Move into a less expensive apartment or let a roommate share the rent. If you are going on a long trip you can put your stuff in storage just before you leave and kill your monthly rent. Cut down on eating out, prepare more of your meals at home. Buy used equipment. Use a cheaper internet service. Get an expert to do your taxes for you (and thus find tax advantages).

Cut Up Your Credit Cards

Start paying back any debt you owe with the money you now have by decreasing your costs. Stop paying interest so you can start earning it. (You may wish to keep one or two credit cards for occasions like renting a car, which is almost impossible to do with cash. Just make sure that you have hard cash to cover all of the credit you use, and pay off your credit bill as soon as possible. Don't get caught in the credit slave trap).

If you are spending money on a liability, rather than an asset, eliminate it!

Keep your list of expenses and go over it every month to see if you can decrease your costs even more. You can save a lot of money without even changing your lifestyle. If you do change your lifestyle just slightly you'll be able to reduce your expenses dramatically. You'll be amazed at how much money you're spending on things that you don't even use.

Spend Less Than You Earn

Decrease your costs until you are spending less money than you earn. This is very important. By spending less you'll have a lot more financial and personal freedom. You'll be able to do the things that you really want to do. You'll have more money, and you'll have a lot less stress. You will have a large amount of control over your life.

Spend less money on things and more money on living.