Why?
Say your spending is $120 and your income is $100 per month. (Just go with me here.) If you were to increase your income to match your spending, you’d have to increase it by $20, which is 20% of $100. But if you were to cut your spending to match your income, you’d have to decrease it by that same $20, which is 16.67% of $120.
I’d judge it to be equally easy to increase earnings or cut spending by 20%, myself. Either find a weekend job or get half my debt paid off. Hell, I expect to do the latter in the next couple of months.
Increasing my earnings would be easier as I am currently a SAHM and don’t have any earnings. If me, getting a job was completely out of the question, I believe we could cut our spending by 20%, but it wouldn’t be any fun.
To go from 80 to 100, you add 25% of 80 to 80: 80 + 20 = 100.
To go from 100 to 80, you subtract 20% of 100 from 100: 100 - 20 = 80.
In either case you’re making a change of 20, but that 20 is 25% of 80, whereas it’s 20% of 100. It makes a difference where you’re starting from.
Define “easy.” I mean, there’s little question that I COULD get a job earning 20% more than I make now, but it would involve moving to a different part of the country, doing some intensive job-searching, and, most likely, ditching the academic career altogether. Cutting spending by 20% would be simultaneously more painful and less troublesome.
Does spending include the money I currently have earmarked for saving? Right now we save about 30% of our net. It would be simple to cut that down 20%: it would be complicated to cut our bills/consumer purchases down 20% while still saving at the same rate. I think we’d have to take in a boarder.
Raises have been rare, hereabouts (though **Typo Knig **did get a bump in the 20% realm when he changed jobs last year, so…) but I know there’s a lot more fluff in our budget than we like to think. Dining out. Postponing some non-essential medical stuff. Cable TV. Groceries could be cut somewhat. Games and music are small but could be cut out entirely…
I’m scheduled to get a promotion in the next year, and I could work overtime if I wished. Increasing my income by 20% within the next year wouldn’t be hard at all.
Well you learn something new everyday. Thank you.
My husband and I are both making pretty good money. I’m certain I couldn’t find someone to pay me more; while he might be able to, it would take some doing.
Which leads us to cutting expenses. We do spend more on clothes, groceries, and entertainment than we actually have to. Also, we are trying to sell a house, and the monthly carrying cost is the biggest expenditure on our books… almost as big as everything else combined. Assuming we could get rid of that house in a year’s time (AND PLEASE OH PLEASE ASSUME WE CAN), cutting our expenses by 20% would be a piece of cake.
Retired and going to be 74 next month, I don’t see how I could increase my income by 20%. Maybe teach a couple sections of calculus to increase by 10%. Cutting expenses would be relatively easy. Don’t spend three weeks in Barbados in February (about $6000). Skip the convert tickets (at least $3000). Don’t eat out (maybe $2000). Buy cheaper food (maybe another $2000). But the biggest savings would come from selling the fully-paid house and moving to an apartment. We pay nearly $10,000 in real-estate and school taxes. We could get a small apartment for probably $500/month. And avoid all maintenance, snow clearing, sell the car, etc. I guess I could also lose the cable, the cable modem service and also the cell phone, to same about $100/month. Stop buying books that we have no room for anyway. Cancel magazine subscriptions.
Either one would be quite feasible.
I could fairly easily increase my income by a substantial amount by trading in my current stable corporate job for the consulting world (e.g. Accenture), at the expense of having to fly somewhere far from home on Sunday night and come home on Thursday night.
We definitely don’t live a frugal life. I love eating out with family, my wife loves shopping, and I love geeky gadgetry. All of these consume lots of $$$ and could be quickly scaled back in an emergency.
I don’t really have the desire to do either at the moment. Hope I don’t have to.