Does more money mean less debt?
What is the solution to getting out of debt? Making more money? That is what we all tend to think.
However, the more we make, the more we spend. I have far more debt now than in university. Typically, as our pay check goes up, our spending goes up proportionally, resulting in higher debt. We’ve all heard the stories of lottery winners who, after two years, are back in the same financial position they were in before winning. Obviously, we need to dig deeper to answer this question.
The solution is not ‘more money’
Please don’t misinterpret! Not having enough money is stressful and finding ways to increase your income is a good thing that can bring needed financial security. However, if we want to get out of debt, we need to re-evaluate both our spending habits and our financial priorities. A good place to start is looking at our sending through the lends of: “Am I being financially responsible or “trustworthy” with what I have?”
How do I become trustworthy with my money?
Let’s be thoughtful about how we spend and what we have. Asking ourselves the following questions is a good place to start.
Are we buying things we don’t yet need?
- Let’s use what we have before buying more. This includes: cleaning products, bathroom supplies, hair care, and items in our pantry. It can be very revelling to assess the value of items stored in our cupboards, freezer, and closets. Typically, we try to eat all the food we have before we buy more. Right now, we do have lots of extra rice and beans in case we need them for isolation.
Are we wasting what we already bought?
- Let’s not waste what we have. I am still using a deodorant that most people would consider empty. I am scraping it out with my fingernail. There is still a week’s worth in there!
Do we have money tied up in things we don’t need or hardly ever use?
- Let’s sell things we don’t need. I have some music books to sell. I have started a box of things I don’t need and can sell. As I find things around the house, I add them to the box.
Are we taking care of what we own?
- Let’s take care of the things we have and be grateful for them. Let’s be glad for our homes and our vehicles and be trustworthy by taking care of them and keeping them clean.
Are we paying off debt and/or saving money?
- When we “save” money, are we taking that $5 and using it to pay off debt or increasing our emergency fund? “Saving” money and then spending it somewhere else is not helpful.
Are we setting ourselves up for ‘spending success’?
- Let’s plan our meals ahead of time to prevent impulse spending and paying more than we need to. I shop for groceries once a week. If we don’t have an ingredient, we usually adjust and make do with what we have.
Our goal should be to cultivate a thoughtful approach to spending. Honestly, until I learn to be more trustworthy with the possessions and money I have, I will not handle extra with more care or integrity. When more comes, I don’t want it to slip through my fingers and go to wasteful places. I want to use it wisely, to bless my family, and move us toward financial freedom and living our dreams.
As we become diligent and faithful with what we have been given, we will be trusted with more. This concept is often referred to as one of the laws of financial success. Dani Johnson does a fantastic job explaining this principle and its implications in her DVD series “War on Debt”. Click here to learn more.