Let’s face it. The economy is in turmoil. People are starting to change their habits by eating out less, shopping less, and so forth. Apparently it takes an international financial crisis for people to start taking a look at their spending patterns. Given the recent job loss announcement along with the credit crunch, it is not very likely that many of us will see a pay increase in the near future. We will have to learn to do more with less. So how do we do it? What if I were to show you how to give yourself a 40% pay raise?
So how do you give yourself a pay raise? It’s easy, but it won’t happen overnight. Take a look at your expenses. If you are like most Americans, you probably have a car payment, student loan, and a credit card or two. You may even have another loan, a mortgage, a home equity loan and I am sure there are a few more that I’m forgetting. Now add up all those payments and see how much of your income is getting devoured by these debt payments. Now, imagine if you did not have these payments. While everyone is different, for most people the amount of extra disposable income you would have if you paid off these debts would be equivalent to getting a 40% pay raise.
So start thinking about how you can tackle each debt, starting with the smallest to quickly pay it off. Your goal as prices rise and economic uncertainty increase is to make sure you are in a position to weather the storm. In addition, you will have established a lifestyle accustomed to a little less consumption which will lead to more savings. Imagine a life where you spend less than you earn, you have paid off all of your debt and you are regularly contributing money into a savings account. I’ll bet economic downturns like this one would be not be nearly as stressful.
Bill Pratt is a former credit card executive turned student-advocate. He is the author of Extra Credit: The 7 Things Every College Student Needs to Know About Credit Debt & Ca$h. Bill speaks at colleges to educate and entertain students about real-life issues in money, leadership and success. His goal is to help students succeed personally and financially so they can improve the lives of those around them. You can learn more at www.ExtraCreditBook.com.