Live Within Your Means, Part 3

How do you resolve financial problems and fighting when you don’t have enough money to pay all of your expenses every month?

First and foremost, you need to resolve as a couple to live within your means. It is purely a matter of your will and discipline. In some ways it is similar to being overweight. How do you get healthy and get your weight under control? Most people who are overweight readily admit they know they eat too much of the wrong foods. They know the answer is really quite simple: eat healthy and move.

And so it is with overspending. You need to get control over your income and what you spend.

On the income side, if you have the ability to work some overtime hours or get a part-time job until your debt if paid down, then do it.

On the spending side, you will need to cut any unnecessary expenses. And DO NOT add any new debt. No new car loans, no new vacation expenses, no new buying time-shares (even it if is a good deal), and no frivolous expenses of any kind. It is time to get your finances under control.

Simple Common Sense Marriage principle: You can’t get yourselves out of debt and live within your means by continuing to spend money the way you have been. Or put another way, you can’t lose weight and still have your cake and ice cream while you sit on the couch. Face it! You are going to have to make tough choices. Evaluate together all those categories of spending and eliminate what is unnecessary or figure out a way to accomplish the same objective with less or no money spent.

Make as much money as reasonably possible and cut all expenses except those that are absolutely necessary.

Michael R

Michael R

For example, a large frothy double shot extra cream caramel machiato in the morning and an extra-large very berry whipped cream smoothie on the way home from work are really NOT necessary. You WILL survive without them. And if my math is right, at about $4.00 per visit, that will save you about $40 per week, or $2080 per year.

And that’s just cutting ONE “I can’t live without it” expense!

Now you need to get to work. Only spend money on what is absolutely necessary. When you disagree on what is necessary, discuss this openly and work towards a reasonable compromise. Remember: You need to work at this together.

Caveat: Have “some” funds built in to your budget  for FUN money. Even those on a strict diet can have a small piece of pie or a brownie now and then. But set a limit to the fun money each week or month, whatever you work out, and stay within that limit.

The next Common Sense Principle is to take your savings from cutting back on expenses and begin to pay down debt. That’s right… Get out of debt. The sooner the better. More on this next time….

One thought on “Live Within Your Means, Part 3

  1. > “Some funds … for FUN”

    To make this happen and still have a predictable month-to-month budget that maximizes debt payment and savings, we’ve found that isolating *all* the unpredictable aspects to side bank accounts or cash envelopes help tremendously.

    One kind of unpredictableness is fun stuff. To insulate against this unpredictability, we each get an allowance into our personal account for fun stuff each month and then nothing fun ever happens from the mainline bank accounts. 🙂

    Likewise, for other unpredictable expenses like gas, electricity, food, taxes, car repairs, etc we take an average over 12 months for each category and then 1/12 of that sum goes into a bill paying account every month with a tiny bit of extra to cover the unpredictableness.

    When all that is done, our income is predictable and the outflow (from the main account’s perspective) is predictable, so we confidently move all remaining funds into savings for long term goals.