An Extra Thousand Dollars
Posted on | December 15, 2006 | Leave a Comment
I overheard part of a conversation where a guy was saying “an extra thousand dollars is what I need”. The context was that if he could somehow find this sum of money, he could pay some bills and his problems would be gone. This is by far, not an isolated desire. In fact, in one form or another, it is typical of a majority of the population. So many folks seem to think that if they could just acquire that “extra amount”, life would be good. It’s as if happiness revolves around solving this ongoing shortfall in their finances.
The reality is that this “problem†is actually incredibly easy to solve. However most people never solve it because they fail to diagnose the reason it exists in the first place. The real “problem†for the vast majority isn’t a shortage of money, but rather a shortage of discipline. But no one wants to hear that answer – in fact most readers will stop reading this because it doesn’t give them the magic solution they’re looking for. But for those who really want to know how, read on.
It’s a fact that most people live at least 10% above their means, regardless of how much or how little income they have. If the guy I overheard were to get a $1000 raise, his problems would be solved – they really would – for maybe six months. But gradually his wants will surpass his earnings and he’ll be right back where he started – once more needing an extra thousand dollars.
The secret to solving the problem is to live below our means which requires the discipline to say no more often than yes to acquiring yet more “stuffâ€. Even if we can “afford†it we should instead be asking do we really “need†it and if so, do we need that branded version when a quality off-brand or generic version can be had for half as much.
The thing that few realize is that it’s a lot easier to come up with an extra thousand by spending less, than by earning more. But it’s not easy to do at first. Our heavily advertised, commercial world is relentless in its attempts to exploit our instant gratification way of thinking. But if you fight back until you reach the point where discipline becomes habit, you will win.
Once a person is back in control of their spending, they can actually start saving. And suddenly when those raises come, and they’re no longer programmed to spend everything coming in, they save even more. In time they eliminate all their debt. They don’t even bother with credit cards because they have the cash for everything they need. And finally, actually having disposable income allows them to invest and build real wealth over time.
Money is just a tool, a commodity that can be cultivated and made to work for us. A multi-millionaire once said that getting the first million was the hardest. If you were to set a more modest goal of say a $100,000 in disposable income, the first thousand will be the hardest. It’s really comes down to choices – you can choose to always be among the masses wishing they had an extra $1000, or you can do something about it. The place to start is with “containmentâ€, which means living below our means. Do that and the rest will come.
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