Even some people with very high incomes are unable to stay out of debt or to save anything for the future because of their inability to live within their means, i.e. to budget. On the surface they appear rich: a beautiful house, a luxury car, expensive clothes. Scratch the surface and you’ll often find a household in extreme financial distress, taking out more and more loans in order to keep up appearances. Things are not always as they appear. Remember: if you have an income of $200,000 and expenses of $210,000, you are a slave to debt. If you have an income of $30,000 and expenses of $25,000, you are much closer to financial freedom.
A high income is not the key to financial security. Living within your means is.
I’d just moved to Vietnam and was trying to live independently on a certain income. Wisely, I downloaded and started using a budget app to help me keep track of my spending. I had no idea how to divide up my budget because it was a new country so I tried to live a somewhat frugal life, recording each purchase for a month to see how things were going.
I knew I was spending too much. Way too much. A glance at my bank statements indicated that I was withdrawing almost twice as much money as I ought to have over the first month or two. But where was it all going?
If you set a high value on liberty, you must set a low value on everything else.
Hopefully you have been persuaded to avoid taking on any more debt, and you are now ready to ‘dig up’ instead of just ‘stop digging’. It’s almost time to make some real progress towards your financial freedom by saving and paying off any existing debts.
But you might still be wondering, how do financially secure people manage to live without credit, even if their income is similar to, or lower than, your own? How are they able to get to the end of each month with no debt, and even with some savings to add to the pile? Is there some trick to this that I need to know?
There is a trick to doing this, and you do need to know it.