There are two solutions to any cashflow problem: spend less or make more money. That’s it. It makes sense though, because those are the two elements of cash flow. Logic tells us that if you adjust one of the two variables of any equation, change will occur. In this instance though, it’s been my experience that most people believe more money is the solution to their problems, not less spending. In fact, I’d go as far as to say 90% of people point to more income as their solution. Take that with a grain of salt though. 65% of statistics are made up and the other 55% are inaccurate.
More income can be a solution, once you’ve exhausted your opportunities to decrease your spending. But I’ll be damned, increasing your income isn’t as easy as clicking your heels together and chanting “there’s no place like home.” Increasing your income is an extreme activity. And that’s why it’s part of our Extreme Solutions series.
You’re going to need a bigger net, net positive cash flow that is. And once you can’t cut expenses anymore, then more income is the solution. But there’s a giant but. If you add more income without addressing your propensity to waste, you are going to make your problem worse. If you add more financial resources (money) to a situation which isn’t resourceful, then this whole plan will backfire. Not only must you exhaust your cost cutting opportunities, but you must also come to terms with what’s up. What’s up, you ask. Purpose. Your financial life needs purpose. An out of control financial life is generally a financial life that lacks purpose. Or, if it does have purpose, it’s a very selfish purpose.
It’s one of the great mysteries of the world. How is it that once you stop thinking of yourself, you’re able to better take care of yourself? I can’t explain it. My guess is that a self-centered mind lives in the present, and can’t navigate its way to the future. All this is to say that you must fix this. Dumping more money into a financial boat full of holes, is a bad idea. You might actually have done this before. If you’ve ever gotten a raise and never really saw the positive economic on your life, then you know what I’m talking about. And by positive economic impact, I don’t mean fun. Fun is fun, but fun isn’t keeping a keen eye towards your future.
Second job time.
You shouldn’t bother starting the second job search process until you know how much money you need to make. If you don’t know why you are working a second job, then why get a second job? The why happens when you know exactly how much money you need to make. Would an extra $500 per month improve your financial future? Cool. Find a job that can accomplish that. Your second job is mercenary money. You are working to accomplish something specific. Don’t just throw the extra money into the pot with the rest of your money which isn’t making ends meet.
You also need to determine how long you should work a second job. A second job is easier to swallow when there’s an end game. You should also know that getting a second job isn’t embarrassing. It’s awesome! You are stepping up and taking control of your financial life. Not only is it not embarrassing, but I’d tell everyone I know about your commitment to your family and your future. Financial problems rarely solve themselves. Don’t standby and hope that you are the exception to the rule. Take action.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.