Tag Archives: material possessions

Your Money or Your Life, Step 7: Maximizing Income

[This is part 7 of a 9 part series on the book Your Money or Your Life. See my original post about the book.]

Maximizing Income is the flip side to the previous step, minimizing spending. The wonderful thing about maximizing income is that there’s a limit to how much you can save, but no limit to how much you can earn. This step isn’t only about your bottom line, it’s also about respecting yourself and your limited time on this earth. Ask yourself: Am I “making a living” or “making a dying?” What are your purposes for paid employment?

I’ll leave the details of making more money as an exercise for the reader. You’ll need to approach it differently depending on your life story, but here are some popular ways to make more money:

  • Ask for a raise
  • Change jobs or careers
  • Pick up a moonlighting gig
  • Earn money from a hobby or field of expertise
  • Sell stuff you don’t need
  • Make your money work for you – as capital, or by investing in yourself (e.g. continuing education)

Plenty 0f fast moneymaking schemes are out there, and unfortunately most of them are peddled by unsavory characters. One person whose advice I trust is Ramit Sethi of I Will Teach You To Be Rich. If you can get past his gen-x writing style, his blog and book have plenty of honest tips on earning some side income. Honestly, he devotes more of his time to getting his readers motivated than anything else. I took his advice and started moonlighting as a social media consultant. It didn’t really turn out to be something I wanted to devote serious time to, but it was rewarding to teach others and earn a little money on the side.

Your Money or Your Life, Step 6: Minimizing Spending

[This is part 6 of a 9 part series on the book Your Money or Your Life. See my original post about the book.]

When it comes to how you spend your time and money, this step is about figuring out how much is “enough” for you. It can be illustrated by the following chart (taken from the book):

When “Your Money or Your Life” was written, the idea that this chart represents (“there’s an optimal level of consumption”) was pretty revolutionary. Since then, it’s become more mainstream: now we have the Voluntary Simplicity movement, and TV shows about people with small houses. The pendulum has swung away from “bigger is better” in the court of public opinion.

Summarizing this chapter is difficult, because you can’t just whip out a pen and paper and tabulate some charts about your money. There’s no formula or steps to follow, because “enough” is going to be different for each person.

To really live Step 6, the concept of “enough” is something that needs to permeate your entire existence. Knowing and respecting your personal level of “enough” goes way beyond spending, yet it frequently saves money in the end. Here are a few examples:

  • Driving the speed limit is fast enough. It’s safer, less stressful, and it saves on gas
  • Eating just enough food lets you split meals when you dine out, and never leaves you in a food coma
  • Cataloging everything I own (Step 1) made me realize the hidden burden of having more than enough material possessions
  • Living in a big enough house cuts down on living expenses, including hidden costs like heating
  • The cheap wine is good enough, so you can either cut down on your alcohol budget, or drink more of it! (This one might be the most controversial)

When you waste money by spending more after you’ve reached the peak of your fulfillment curve, you’re wasting your most precious commodity: your life energy (you have only a finite amount left). My friend Evan put it best, when talking about the time/money tradeoff:

It rarely seems worth it to spend another hour in a cubicle to have a more tender piece of meat for dinner.

Living a life of “enough” is what 90% of frugal blogs focus on: cutting back, doing without, “money-saving tips!” etc. It’s the stuff that practically writes itself because it’s so easy to look around your house and say “I wasted money (or time) on that.” But as we’ll see in the next chapter, there’s a flip-side to minimizing spending. Even better, it’s more enjoyable and potentially much more productive: maximizing income. Stay tuned!