Say in 12 months time, you had to either accomplish one of the two. You could either increase your total earnings by 20% or you could cut your total spending by 20%, which do you think would be easier to accomplish?
Well, I’ve gotta believe this will go 90-10 toward cutting spending–seems like someone who believes they could increase their earning by 20% would have already done that. But maybe people would increase their earning by taking on part-time jobs that they wouldn’t normally do, so I dunno after all.
Also, I’m sure you are aware that the “20%” in the two scenarios isn’t really the same number if the income would be taxable. Cutting spending by $15k a year can be the equivalent of earning an additional $20k a year depending on applicable tax rates.
My expenses can’t be cut back much at all, definitely not by 20% - unless I gave up my health insurance. In order of cost: rent, health insurance, my food (no eating out), phone, pet food, electric, and cat litter. Anything extra is usually spent on my pets or on clothing.
I could easily be making more money.
It would be difficult to cut expenses by 20% in our house. Cars were paid for years ago, mortgage is at a low rate. I could stop eating out for lunch on workdays, and we cut cut out vacations, but those wouldn’t cut our total spending by a very large fraction.
I have a manufacturing hobby that makes extra money outside of my day job. I have deliberately not expanded/outsourced it because I don’t want it to take over all of my freetime, and because I enjoy doing the manual labor directly instead of managing other people. If I wanted to increase household income by 20% I could probably do it here: outsource the labor, increase marketing effort, sell in bulk quantitites to resellers.
We could easily cut expenses 20% if we really had to. I’m ashamed to say that we spend a lot on non-necessities. Fortunately we can afford it right now – we still put plenty away in savings.
Either one would be difficult. There’s no way I could make more at my current job, so I would have to get another job or part time work; not likely in this economy. Ditto my wife.
On the other hand, we already live quite frugally. My wife is an economist of Scots descent, so she would see cutting our expenses by 20% as an intriguing challenge. We could probably do it.
At this exact time in my life it would be much easier to increase my earnings by a large factor. I am working on limited pay because our business is low on cash. I have been offered two different jobs at more than twice what I am making.
Obviously I’m gambling on the hope that our business becomes successful. I can afford this risk for the time being.
I am fairly thrifty in day-to-day expenses, but like to use that savings to enjoy dinners out, movies, mini-vacations, expensive gifts for loved ones, etc. So I probably could cut my over-all expenditures for the year by giving up all of those things, but I’d much rather make more money if need be. I’m hourly and turn down good-paying overtime work regularly, as I’d much rather be at home with my people. 1.5 pay adds up fairly quickly, so I could make 20% more if I needed to, although I wouldn’t have much time to enjoy any of the benefits of doing so.
I am offered a lot of freelance work (nearly all of it through my day job) that I turn down because I want to have evenings and weekends free to go out with my husband and friends, doing things I want to do. If I wanted to up my income by about 40% I could take all the freelancing that came my way and start actively soliciting more work from other sources. I wouldn’t do it forever, but I would much rather work more (I am lucky in that I like my work) and continue my same outflows of books, records, charitable giving, going to the theatre and nice restaurants, etc., as long as it was only temporary.
I could possibly do either one. Last year was not horrible income-wise, but it wasn’t my highest year for billings either. It’s possible that next year’s business could increase 20%.
OTOH, it would be relatively simple for me to cut 20% if I absolutely had to, by dropping the support I give to my kids, niece and sister.
Nope I am at barebones now. Rent, Food, Bus fare and Internet. If I need new clothes or gets sick I’ll be SOL
Ah for the good old day 
Technically, *easiest *for me would be increasing earnings because I could call my schedule maker right now and request to do all night shifts and get that amount of increase. Which would I rather do is another question (and another answer!).
Given no restrictions or ethical concerns if I had to make 20% more income by any means necessary that’s no problem at all. There are dozens of illegal enterprises one can engage in to make money from nothing.
Or so I’ve heard.
I am retiring this year, and as a public school teacher I won’t get social security under my earnings, nor will I get my spouse share of my husband’s Social Security. My pension will be about 40% of what I earn now, and health insurance will have to come out of that. I will be cutting my spending by way more than 20% in about six months. Luckily we have some savings and my husband is still working for a year or so more, but there is no way my income can increase by 20%.
Depending on your marginal tax rate, you’d only have to cut spending by 10-15% to match a 20% increase in pre-tax income. Eating out half as much and canceling a couple of planned trips would get it done.
I could do both actually. I just don’t because I’m lazy.
That would have been my answer, but I was too lazy to post it.
I could easily cut back on my mortgage payments to achieve the 20% reduction. Finding work that pays 20% more would be quite a challenge.
Increasing my earning tends to decrease my spending. To me it’s not worth making more if I’ll never have time to enjoy it.
Increasing my earnings during the winter would be quite a challenge. I don’t tend to have enough jobs that I can afford to turn them down. During the summer however I could double my income but I have no intention of working 120 hours a week.
Note that if you’re in a position where cutting spending by 20% (with no increase in income) results in breakeven, then income would have to increase by 25% (with no decrease in spending) to reach breakeven. Similarly, increasing income by 20% would be on a par with decreasing spending by 16.67%.