Don’t Borrow from Tomorrow’s Income


Today’s guest blog post is by Barney Whitstance.

In this debt driven world, we thrive on our credit cards to make purchases, aiming to pay them off once we get our paychecks. This may seem like a good idea but in reality, it entraps us into valuing our job much more for the money it offers than for other factors like career growth and satisfaction. This makes us feel like slaves who spend money before we even lay our hands on it. We tend to open up various lines of credit where every month a certain amount is dedicated to fulfilling each stream. This over-reliance on “future income” is one of the biggest financial traps as it makes you vulnerable to overextending yourself with debt if you part ways with your job for whatever reason. Things need to align themselves financially if we are to keep ourselves safe from this over dependence on our jobs.  The way to go about it is to reduce your spending where you can, allowing you to save more than you previously and live off that mountain of cash you accumulated instead of being burdened by a pile of credit weighing down on you. Here are some guidelines to help you reduce your spending and save more money, thus reducing your financial dependence on your job:

Consider your house as a creature that can eat as much as you throw at it, while also retaining the ability to survive happily on a small amount of food every day. Utility bills are one of the biggest issues we ignore while setting our goals to reduce our spending.  However, they can substantially increase your savings if you turn your home into a more energy efficient place by cleaning coils, fixing air vents, keeping the air-conditioning in proper shape and using efficient lighting systems in your home.

Consider the idea of renting as it will save you a lot of money in property taxes, insurance, and mortgage payments. A mortgage payment can eat up a large portion of your salary.  Plus, if you lose your job and can’t make the payments, there’s the fear that the house will be gone and the previous payments will carry little value.  Buying a house isn’t a decision to make lightly.  Renting out rooms in your house and finding a house which reduces your commute can save you a considerable amount over the long run.

Insurance premiums – medical, auto, home, and the like – can also keep us over dependent on our paychecks.  First, be sure to shop different providers at least once every few years to ensure that you are getting the best deal.  Once you have a nice nest egg in your savings account, consider raising your deductibles which will lower your monthly payments.  Check into pharmacy clinics and urgent care centers and use them instead of heading to the emergency room which is sure to rack up large expenses. 

Do not fall prey to impulse buys and indulge in unnecessary spending and instead use that money to pay off any debt you might have accumulated first, starting with the ones that make you pay the highest amount of interest over a large period of time. Avoid credit cards as much as possible by making only cash payments for the items you purchase.

 Most of us have developed the habit of viewing our credit cards as a savior to salvage our pride in times of need. We can do away with it and begin to value our money that is present in our hands at the current moment which will not only help us in saving it but make us more strong, subtle and viable to not only survive but also do so ever so happily that we should have realized a long time ago.



Barney Whitstance is an enthusiastic Finance and Economics blogger who is most interested in global economic climate. Apart from doing majors in Finance, he is also a Chartered Accountancy Student and planning to complete his Ph.D. in Finance before he turns 30. You find him  on Twitter.