Liz Pulliam Weston
Jason Adair is irritated by all the stories he sees about how to save money.
Most of what he reads on the Internet or sees on television seems targeted at people who actually have budget fat to trim, not people who are truly living paycheck to paycheck -- like he is, supporting a family of three on a single income of $40,000 a year.
Take just one bit of typical belt-tightening advice: "Eat out less!" Adair, an information technology worker from Morrisville, N.C., wonders how that would be possible.
"Please, spending $15 at Arby's every other month is a splurge. My wife and I have not purchased a meal in a real restaurant in about three years," Adair wrote MSN Money in an e-mail. "I want to see an article that helps people that are truly struggling."
Adair's got a good point. When it's a matter of cutting out a few lattes or trips to the mall, saving money can be relatively easy -- maybe not fun, but certainly not excruciating. When you're facing a choice between paying the electric bill and buying health insurance, advice on saving money can seem like a sick joke.
How people really live
Adair's also got plenty of company. Even in the richest country in the world, many people barely keep their heads above water. Consider just a few statistics:
* Half of American households live on less than $46,326 a year, the median household income figure for 2005, according to the U.S. Census Bureau. That inflation-adjusted number hasn't seen a substantial increase since 1999. One out of five households lives on less than $20,000.
* Twenty-two percent of U.S. respondents in an ACNielsen study of consumers worldwide said they had no spare cash left after paying for basic expenses. That compares to 17% of consumers in Great Britain and 15% in South Korea and Germany.
* Some 37 million people, or 12.6% of the population, live below the federal poverty line, according to the Census Bureau. (That line varies by household size and composition; for a family of three with a minor child, the income limit would be $15,720.)
* Nearly 47 million, or 15.9%, have no health insurance, the Census Bureau reports, and medical bills are a factor in half of all consumer bankruptcies, according to research by Harvard University professor Elizabeth Warren. Those who do have insurance often pay a big price: Two of five adults (43%) who bought health insurance on their own spent more than 10% of their incomes on premiums and family out-of-pocket medical expenses, according to the Commonwealth Fund, which describes itself as a private nonpartisan foundation that supports independent research on health and social issues. When an employer provided the coverage, one of four (24%) of those insured spent more than 10%.
I'm not going to fix our broken health-care system or cure poverty in this column. I'm also not going to provide an exhaustive list of money-saving tips. You can check out MSN Money's Decision Center on saving for those. (If you're really in a fix, you might want to check out "How to not pay your bills" and MSN Money's Bankruptcy Guide.)
What I want to do here is provide some food for thought for those of you who have OK incomes and have cut expenses every way you can imagine, but are still floundering. To start:
Remove 'can't' and 'won't' from your vocabulary
I'm not one who believes that financial problems can be solved simply by chanting the right affirmation, decluttering your "money corner" or burying an upside-down statue of a saint.
But I do believe the messages we tell ourselves have a powerful effect on our attitudes and actions. I've learned, though my own struggles with money and from advising other people over the years, that when we tell ourselves we can't do something, it's pretty much a self-fulfilling prophecy. If we believe that the problem is bigger than ourselves -- that we're entirely the victims of circumstance, that nothing we can do will make things better -- we're stuck.
It's true that we can't change the past, and it may also be that a lot of bad stuff happened to put us in the position we are today. But we do have choices going forward.
If I say, "I can't do this" or "I won't do that," I limit my options. As soon as my attitude switches to, "I will do what it takes to solve this problem," solutions begin to present themselves. Often, they were there all along.
I have no idea what your solutions might ultimately be. But I've watched people with tiny incomes get their financial act together, save money and make progress toward their goals. I've also seen people with substantial incomes fail to do any of the above.
The difference: their attitudes and their choices. You do have a choice about whether to save, and your attitude can make all the difference.
Take another look at those 'fixed' expenses
As I discussed in "7 roads to financial ruin," it's pretty tough to sustain a reasonable spending plan if you've let your basic living expenses swell to more than 50% of your after-tax income.
If your basic expenses are too high, you just don't have enough money left over for savings, debt pay-down and "wants," which include stuff like clothes, gifts, vacations and the occasional dinner out, according to Harvard's Warren, co-author of the personal finance book "All Your Worth."
That's exactly the fix Jason Adair is in. His family's rent, at $855 a month, consumes about one-third of his take-home pay. Add in a whopping $400-a-month health insurance premium, and he's already near 50%.
Once he's accounted for all the family's other "must haves" -- car payment ($475), car insurance ($65), utilities ($170), food ($200), other loan payments ($105) -- he's up to 87%. No wonder money feels so tight.
Any solution is likely to be tough. Cheaper insurance might mean switching doctors or pediatricians. A lower car payment might mean selling the current car and settling for a beater -- or might not be possible at all if you owe more on your car than it's worth. Finding less expensive digs means moving and could mean a roommate, neither of which is all that appealing.
No part of your spending should be considered off-limits for possible cuts, though, if you really want your finances to work. One poster on the Your Money message board was shocked that anyone would suggest trimming child-care costs, which are a large part of many budgets. But other posters explained there are often reasonable options for those who do their research and are willing to consider other possibilities.
"Sometimes you can find less-expensive daycare, a sitter, or even change your job shifts to spend more time at home," wrote cschin4. "Nobody is telling anyone to neglect their children."
Another poster, Table for 2, agreed: "My old daycare cost me $110 a week and was very bad. Now my new daycare costs me $90 a week and we just love it."
In some cases, Warren notes, spending more than 50% on basics temporarily isn't a problem, such as when you're unemployed or adjusting to a new baby, as the Adairs are. But long term, you'll want to get as close to that 50% mark as you can if you want a sustainable budget.
Look for ways to boost your income
If you've really cut expenses as far as you're willing to go and you're still not keeping up, your only solution is to make more money.
Talk to people who've gotten out of debt, and many of them did both. They trimmed their budgets, but they also asked for raises, found new jobs, moonlighted, started sideline businesses, sold stuff on eBay, held yard sales. Their older children got after-school jobs; if one of the parents had been staying at home, he or she went back to work. (If you're looking for non-commuting options, check out "4 real jobs you can do from home.")
You'll want to avoid any "solution" that's likely to cost more money than it generates, like the typical multilevel marketing scheme or work-from-home scams. Making real money tends to involve real effort, but it can be done.
If you're struggling with money and want ideas for solutions, come to the Your Money message board. You can just lurk and read, or you can post about your situation and get specific suggestions. If you've won your struggle with money -- or are on the way -- please come and share what you've learned. Who knows -- you just might inspire someone else.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.