The Importance of Downsizing
With all that extra income you've begun to accumulate, you're probably itching to spend it. That new iPhone looks pretty nifty doesn't it? It wouldn't hurt to treat yourself just this once, right?
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WRONG.
That urge to get rid of your money is the effect of constant exposure to consumerism that most of you have dealt with your entire life. In addition, you're in a very precarious position right now on your road to wealth. Many of you, happy with the extra money that good financial habits have brought you, will become less motivated. You'll fire all your little green employees to buy new furniture, clothes, and other items that produce no extra income. Soon, with the complacent mindset that no non-benefit debt has put you in, you'll slowly sink back into your old ways, stuck being financially mediocre because society has told you items are what you want instead of more time and ease of mind.
It is very true you're at a tipping point right now. Now let's continue for those that want to avoid always being stressed about money and want to make money work for them.
Many businesses, seeing great success early in their ventures, decide to rapidly expand. They take out loans, buy more property, and hire many new employees. It's in this stage that many businesses fail, all because they expected future earnings that never came. At their original size they could have survived, but they had grown too much, and become too bloated to live off the smaller revenue.
Many successful people conduct themselves the way they would conduct a business. It is our opinion that this is a very good mindset to have, especially if you continue viewing money as your own personal employees that work 24/7 to earn you more income. Therefore, we think that it is in your best interest to downsize , or reduce the costs of, yourself to ensure future success.
To go about doing that, look at your monthly budget (click here to make one) and see what expenses you have. The downsizing process has already begun by getting rid of that unneeded debt, but there's still additional costs to be cut. Many people downsize their homes and end up hiring a ton of little green employees each month because of reductions in mortgage payments, utilities, property taxes, etc. While we're not asking you to do anything that drastic, it might be a viable option for some people (you know who you are).
Back to your expenses, look at what you fire some of your green employees for each month. Netflix subscription? Phone plan? Storage units? Look at each one and really determine if it is worth the cost. There are many low cost alternatives that fly under the radar that are helpful in reducing costs. Look at ways to reduce utility bills. If you have no intention of moving, refinancing your mortgage to get a lower monthly rate could also help reduce costs. Don't be afraid to get creative, and there are numerous websites that specialize in living a frugal and minimalist lifestyle that can give you ideas on how to cut costs.
A lot of costs reductions can compound as well. Selling your boat means no more payments to store it somewhere. Have a yard sale instead of sticking everything in a storage unit. Get a library card instead of buying books all the time. Shedding unneeded expenses is almost as thrilling as paying off your debt, and just as beneficial.
For those that need a reminder of why downsizing is important, think about the failing business. They made the same amount of money, but because of all the loans, new hires, and new property they could no longer afford to run. Become your own streamlined business, with the number one priority of having as many little green employees as possible.
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Posted in Financial Services Post Date 11/27/2016
