Live on Half of What You Earn

savingsCould you live on half of your current monthly income?

Before you rush to say no, just take a minute and imagine yourself with half of your income.

Could you survive??

As I have been paying off a ton of debt, I decided to take my budget worksheet and add another column.  I went through every category after cutting my income in half and tried to figure out how to make everything work.

During my extreme debt payoff my family has made a ton of cuts.  The biggest cut was in entertainment expenses, which we reduced by 90%;  We chopped our clothing and toiletry budget as well; we don’t buy clothes and buy only generic soaps.  Our food budget was cut drastically after doing some simple menu planning and my wife being extremely thrifty.

If we really tried, we could spend only 50% of our income. We would lose a lot of the luxuries (including savings, rental properties, music lessons for kids, camp, etc.) that we consider part of our life, but we would still have a home, food, and a family.  Admittedly nothing more than that, but still…it was an important exercise to go through.

It is estimated that less than 10 percent of Americans are in the position to have all their present and future needs taken care of.  Most people retiring over the next 25 years will have only their Social Security payments to sustain them.  That’s scary stuff.

We are a nation of spenders, not savers (although I do believe that is slowly changing).  People spend far more than they need on stuff that they don’t really require; until recently that included me.

Try this experiment out with your budget and see if you can’t cut out just 10% of your spending for the next 6 months.  Just 10%.  You can do that.

Then cut another 10% (15% maybe?) over the next 6 months after that.  Yes, that too is possible.

Living simply is not living cheaply or depriving yourself.  Our family has made a ton of cuts in spending that we have yet to feel.  Is your life really going to suck that bad if you don’t eat out?  If you don’t buy expensive coffee every morning?

The process of attempting to live on half of your income will help you get in touch with what is really important in your life, and to reach a level of moderation that will leave you feeling in control.  It took me 20 years, but I am (just about) there…finally.

There are a lot of people who will think I am nuts for writing this post.  Maybe you won’t get down to 50% of your income as expense, but that’s not the point.  This exercise is simple, and if you have been living on the edge like I was, getting to a point where you can live on less than you earn will put you completely in the driver’s seat moving forward.

Try it out and let me know how you do.

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