You'll never amount to anything if you can't successfully live below your means.
Sure, you probably won't be super rich and driving a super car anytime soon while pulling in twenty thousand dollars a year. That isn't to say that you can never become wealthy. There are however several key factors to building wealth that will surely determine your abilities to succeed. The most important, and unfortunately the most ignored principle people face is that of living below their means. The biggest problems I believe tend to be psychological. The first issue being that of the get it now, pay for it later mindset.
Credit Card Debt Can Destroy You
Most difficult of all, is maintaining and using credit cards properly. The average person can't, not for the lack of trying, it is just extremely difficult to resist purchasing something you believe that you need now, and expecting to pay for it later. Knowing all to well the perils of credit cards, I purposefully leave mine at home. Now when an apparent need for them arise, I would have to go back home, and get them. Usually by that time, I have reconsidered the need for whatever it was that I wanted in the first place. However, if your not consistently renting vehicles, or staying at motels, you should reconsider even having them.
No matter the emergency, if you've reached a point that you need a credit card to bail you out, consider that if you make a purchase with it and pay for it with your next pay check, it is very likely that you'll end up in the same situation again since your next pay check will be taking an unexpected hit. This can, and often does lead to a cycle that is extremely difficult to break from, especially for those that are living pay check to pay check. It's often better to admit defeat, and find an alternative rather than making that purchase on a credit card.
If you choose to keep, and make use of your credit cards, you've got to be extremely disciplined in their usage, and always sleep on a financial decision. It is all to easy to justify a temptation and fall prey to the idea of instant gratification. Instead, wait a full day and decide if you truly need it, or if you could do without it. If you would truly like it, come up with a savings plan for it. Earning something by working hard to fight temptation, and saving over time is so much more gratifying.
Reducing Your Cost Of Living
Reductions of cost is often much more effective than complete elimination. For example, instead of deciding to for example get rid of your cell phone, figure out what features you absolutely need, and which you could do without, then call your provider and get those features removed, and ask them if they can provide a better deal on those features that you do need. You'll find more often than not, that your provider is more than glad to give you a deal, you've just got to be willing to ask for it.
Of course, eliminating an expense completely does offer its own benefits, however it can lead to future over indulgence which can cost more than having it did in the first place. For example, if you're a coffee drinker, it is probably best to continue drinking coffee, but at a reduced rate. Quitting completely can just lead to you falling back on it, and end up drinking and spending more than you ever did before. So be completely sure you can do without something before getting rid of it completely, and test it out. If you think you can do without a cell phone, then take it and toss it in a drawer, and see how you feel in a week. If you found yourself taking it with you, or constantly checking it, then you'd be better off finding features you could reduce, and trying to get a better deal from your provider rather than getting rid of it.
One major expense that many people have is power and fuel, and we use it with such disregard. It takes some getting used to, but you can make it habitual to turn your car off when idling, or shut the lights off when you leave a room. After a week or so it'll become second nature to think about shutting down things that are not in use before you leave. Another thing to do is before purchasing big ticket items like washers, dryers, freezers, stoves, microwaves and the like is to make your decision based on its energy efficiency rating, and what you truly need.
There are many things you can do in your own home to reduce your cost of living, so take a look around and make it a game to try and reduce your utility usage as much as possible, not only does it help your budget, but it helps the environment as well.
Conclusion
Reducing your credit card dependencies, and cost of living can help you live below your means, but don't limit yourself. Always be looking for new ways to save money, whether it be brewing your own coffee, or switching to cold water detergent. There are a lot of cheaper alternatives, and methods to decrease your costs. So long as you open your eyes to them. The next post on the How To Become A Millionaire series will be on the topic of budgeting, and using excel to make living life with a budget a lot easier.
Article Source: http://EzineArticles.com/expert/Mark_D_LeBlanc/1386757
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