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Mary Hunt Headshot

Spend Money Where It Counts

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Even the mention of words like "frugality' and "thrift" send some people over the edge. Those words conjure up thoughts of poverty and deprivation. They assume that cutting costs is tantamount to diving into dumpsters to find one's next meal. No wonder so many people prefer a life of debilitating debt to one of frugality.

Let me set the record straight. Please.

There is nothing undignified about spending less than you earn. That's called living below your means, and it's a fabulous way to live. When you spend less than you earn, you have some to save. And to give away, too. When you spend less than you earn, you are not dependent on credit to get by. It is a very good thing.

So, you may be wondering how you can move from overspending to spending less, without giving up your quality of life. It starts with prioritizing everything according to how important it is to your life. Then only spend on things at the top of the list, ruthlessly cutting your spending on the things that are don't matter so much.

The way to get started with prioritizing things in your life is to come up with a system, like "on a scale of one to 10...." Now, apply this to every way that you spend money. Do not hand out "10s" willy-nilly. Reserve that designation for only those things you truly love because they bring incredible joy and fulfillment to your life.

As you prioritize, examine everything. Do you eat out often? Go to the movies? Travel? Do you spend on home-improvement projects, kitchen gadgets and visits to the gym? Are cable television and electronic devices a main source of joy? Are you most fulfilled when you are donating your skills and time to an outreach charity in your community? Is fancy jewelry your thing, or are you more into driving a fancy car? Perhaps for you it's shoes, or gifts for those you love.

Our lists are not likely to be the same. For example, eating out in mediocre chain restaurants is not a priority for me. To me, the food is overpriced and of inferior quality. Having my own car is not high on my list, either. And I could not care less about English bone china or maintaining a koi pond, but I know people for whom both rate 10s on their lists.

But having a beautifully maintained yard with flower gardens, traveling to beautiful places and spending time with good friends are all at the top of my list. I will cut mercilessly in other areas to have money for the things that I really love.

Personal finance is not about saying "no" to spending on the things you love. Living below your means is not about adopting a life of poverty. It's about conscious decisions, not guilt.

It's about determining for yourself how you will spend your money, not according to how your friends live.

Living an extraordinary life on an ordinary income is about planning and deciding what's really important and then having the courage to not spend your money accordingly.