How to Have More Money

You can have more money. And you can have it — get it — without turning your life upside down or driving yourself nuts. Seriously.

I got it that way, quietly, simply, and still am. You can, too. Maybe only a modest amount more, maybe a lot more. I don't know. But I do know that you can have more. I'm not doing anything so far as concept and technique go that you can't either. I just work the simple little four-point program that follows. You're welcome to it.

Here's what I do — and don't do.

Never incur new unsecured debt
I don't debt and haven't for 28 years now.

I know: using debt as a verb is unlovely. But it helps to distinguish that act from other uses of money, to be clear about what is actually being done — not spending, buying, enjoying, but: going into debt.

Readers of Get Rich Slowly and other personal finance blogs almost certainly know that using unsecured credit is a bad idea. But I'll tell you: It's more than a bad idea. It's a catastrophe. If any single thing can crush, break, and poison a life, kill anything of value or pleasure in it, it's unsecured debt, the sustained and mounting pressure of it over months, years, and even decades.

In his play A Doll's House, Henrik Ibsen wrote more than 130 years ago, “There can be no freedom or beauty about a home life that depends on borrowing or debt.”

True. I've never seen anyone for whom it isn't.

By the time I bottomed out on debt myself, way back in 1984, my marriage was over, my books were out of print, and my life shattered. I was waking up every morning with ground-glass in my stomach thinking, “Oh God, there's another bill coming in!” without any idea how I would ever be able to pay it. I was living in near constant pain and despair.

I was $113,000 in unsecured debt then (in today's dollars), had expenses of $3,000 a month and a guaranteed income of only $350 a month. It was clear, finally — made brutally clear to me by the misery, the anguish even — that this could not go on. So I stopped debting, cold turkey. Because I had to. Because I knew there was no other hope for me.

From that day in March of 1984 on, I did everything and anything I had to in order not to go one single dollar deeper into unsecured debt:

  • I sold things I owned.
  • I gave up my apartment and moved in with a friend.
  • I cut expenses to the bone, then cut into the bone.
  • I said yes not only to whatever kind of new literary or teaching work I could find, no matter how little it paid, but to any work.

Slowly, slowly, things began to get better.

It was out of that bottom and my recovery from it, out of not-debting, eventually paying off all that unsecured debt, and becoming free that I wrote my first book on personal money, How to Get Out of Debt, Stay Out of Debt, and Live Prosperously. It was the first book ever on that subject, to my best knowledge, and it's been in continuous print since 1988 (updated and expanded in 2003).

Now your circumstances may not be anywhere near as dire as mine were (at least I hope they aren't), but the fact remains: You cannot get out of debt by going deeper into it. Nor will you be able to bring more money into your life — at least permanently, steadily — until you stop incurring any new unsecured debt. At best, that kind of debt will just continue to siphon money out of your life, relentlessly, and will be a nearly impenetrable barrier toward bringing more of it in. More that's yours to keep

So unless you can claim that you genuinely live free of any amount — any amount — for, say, at least 40 weeks out of every year (an only partly arbitrary number) . . . stop debting. Right now.

Understand that all economies are personal
Everyone — you, I, and everyone else — has his or her own personal economy, which is separate and apart from the national economy. In fact, so far as bringing more money into your life goes, the larger economy is mostly irrelevant.

Some people have a hard time wrapping their minds around this. I certainly did.

During most of the booming 1980s, when money was washing back and forth through the economy in great tidal waves and Americans were prospering as they rarely had before, I was making very little money. This wasn't because of any technological, social, or other kind of upheaval that had disoriented me. I could argue for that (in my own case the rise of video and cable TV, computers, changes in the publishing industry, a shrinking literacy rate, a blow to my personal life), but it would be a specious argument, mostly a function of denial.

Weren't there some real reasons? Of course, but they came and went and I was still engaged in what I have since come to call underearning. And at the same time, there were other people whose backgrounds and experiences were similar to mine — who got divorced, for example, or were writers — who weren't underearning.

These days, the Banking and Real Estate Collapse of 2008/2009 remains the great ogre: the bogeyman, scapegoat, and whipping boy of the moment, blamed by many for the fact that they're in debt or can't get ahead much. (Before the Collapse of 2008/2009 it was the Dot.com Crash of 2000/2002; before that, the Recession of the 1990s; before that . . . .) In some cases, it's true; those events and their aftermaths did preclude some people, some few, from any chance of bringing in more money. But consider: In the very midst of those booming 1980s, more than 20 million Americans, from all classes, backgrounds, and walks of life found themselves overwhelmed by personal debt. And this: Personal bankruptcy climbed by 300 percent during those prosperous years to nearly 1 million people a year by the end of the decade.

On the other hand, at the height of Recession of the 1990s, and during the first full twelve-month period in which I practiced this simple system, along with a few supporting concepts and techniques, I brought in more money than I ever had in any other year of my life, significantly more. And that same thing is true — at the very least, some kind of increase — of everyone I have ever worked with or known who has employed this system. What I and they have had in common, in addition to the other three parts of this system, is that we recognize (or, some might argue, choose to see) that all economies are personal, even when the macro economy is struggling or in a serious downturn.

There is no denying that the larger economy does have an impact, but the most it can generally dictate, barring complete collapse, is the manner in which you earn your living and otherwise bring in money, not whether you can. Your economy is personal.

Diversify
To diversify means to spread over several areas, to introduce variety. It's a time-honored financial principle. Corporations do it by entering multiple arenas of activity or making different kinds of products. Investors do it by buying several stocks instead of just one. The primary advantage of diversifying is that it minimizes the risk of loss. Basically it's a practical application of the old saw, “Don't put all your eggs in one basket.”

Diversifying in your life — your earning life, your money-getting life — can give you the same advantage: minimize the damage you might otherwise sustain in a setback such as being laid off or losing a client, generate new opportunities for you and maximize your ability to take advantage of them.

If one definition of insanity is to keep doing the same thing over and over and expect different results, another is to keep doing over and over again something that used to work, after the context has changed, and expect it still to work.

That's what I had been doing. My first step in stopping this was to admit to myself that what I had been doing — writing novels, and in a particular way (selling them before I wrote them, in proposal form) — was no longer working, wasn't bringing in enough to meet my needs. Once it had, but now it wasn't. What follows is a distilled version of how I initially diversified, back in the late 1980s and early 1990s.

How I Diversified

First, I asked: “Where does the problem lie — me, my agent, or the changes that have taken place in publishing?”

The answer, I decided, was in all three.

The solution: change agents, alter my own activities. (There was nothing I could do about publishing, which is a monolith.)

I changed agents.

It was in changing my activities that I diversified.

I began to write for magazines again. (Which I hadn't done in nearly a dozen years.) The money wasn't such that it offered a long-term solution, but the cash was helpful in the short run.

In books, I turned to nonfiction, drawing upon my work, research, and experience in psychology, personal transformation, and debt recovery over the past several years.

I searched myself for other marketable skills I might have. (My resume said: “Mr. Mundis has been a novelist for 20 years.” I looked in the paper; there wasn't much corporate call for novelists.)

Editing, I decided. That was a skill I possessed. So I became willing to go into an office for a while. (Here I discovered that I had an ego-investment in never having worked for anyone else, and had to overcome that). But though I was now willing, who would hire me? I had never worked as an editor in my life. In fact, except for a few months right out of college, I had never worked for anyone in any capacity. But I went ahead anyway, made phone calls, sent letters — and ended up as a feature editor at The New York Times, where I stayed for a year and a half.

I also knew more about overcoming writer's block than anyone I'd ever met or whose work I'd ever read. Because of my own difficulties with block, I'd had to develop and employ a variety of means over the years to render it harmless. So I put together a consultation session that would break writer's block for anyone, forever, in a single afternoon, and establish for them a productive and reliable working schedule. The first year, that consulting brought in 15 percent of my gross income.

Next, I adapted the block-breaking material into a day-long seminar designed to reinvigorate corporate staff writers who were burned out, and took that seminar into corporations and professional associations.

Then, staying with nonfiction, I wrote a book which presented step-by-step the program I used in breaking writer's block.

Shortly after, one of my block-breaking clients, a writer and television producer, became involved with a project for cable television and asked me to join him as a writer. I did, for six months.

I also developed a series of workshops on debt-recovery and other aspects of handling money in a positive way, which I presented for corporations, private institutions, and community groups in various parts of the country. . . . .

Now, at this writing, I'm busy scanning some dozen and a half of my out-of-print novels and nonfiction books, converting them into Word documents and formatting them for self-publication as eBooks for Kindle and Nook, and on Smashwords for iPad and other readers.

After that, well, I don't yet. There'll be something.

Diversification, then, is a process in which you identify the skills and abilities you possess in addition to those you use in your main occupation — or further ways to apply those you already do use there — and then find avenues through which to turn them into income-producing activities.

Craig, for example, a high-school teacher in Minnesota, an avid fisherman and outdoorsman, diversified by guiding parties of vacationers on fishing trips, later by creating a small business out of repairing and reconditioning antique fishing tackle and boats, and still later by making custom bamboo fly rods to order. My friend Judy Collins, the Grammy winning singer, songwriter, and author, created her own recording company, Wildflower Records, and has signed several artists to it in addition to maintaining her own demanding concert schedule.

If you're already working fulltime, you can undertake diversification as something you do an evening or two a week or on a Saturday morning or afternoon, whatever fits your life. I'm not suggesting that you simply work more hours each week: the key is to be sure that your diversifying activities are high-paying — in the sense that they bring you, ideally, at least twenty-five percent more per hour than you make at your job or normal work.

It was out of my desire — and in my case, need — to bring in more, that I ended up writing my second book on personal money, Earn What You Deserve: How to Stop Underearning and Start Thriving.

Finally . . .

Conduct a brief nightly review
I did this each night for several months when I first started to work this system. I have done it again at different intervals over the following years. And I have recently undertaken it anew. Here is how I do it.

In bed, just before going to sleep, I review the day in this manner:

  • What two or three actions did I take with money or around money that were the most helpful to me in handling it well and bringing more of it in? These might be anything from having put in a solid day's writing to promoting a workshop, answering business email, or just simply checking my account balances and transactions online.
  • Then I look for the two or three actions I took (or failed to take) that were the weakest with money or maybe even damaging to me in handling it well and bringing more of it in. Maybe I quoted too low a price for doing a piece of work, put off responding to a voicemail from someone inquiring about coaching, or simply didn't clear my desktop at the end of the day so it would be clean and efficient for me the next morning.

With the latter, the weakest actions, I don't criticize myself for them but simply recognize them for what they were and use the recognition to inform and help myself in making choice and taking action in the days to come. With the former, the things I did well, I just note them, acknowledge them, then file them away someplace in in my mind where at one level or another they remain useful to me as future referents.

Few other practices will make you as quickly and vividly aware of your blind spots, oversights, and weaknesses around money as this one, of the impediments you create to bringing more of it in, and maybe even of your underearning if you have a touch or more of that.

The first month I employed it was a revelation to me. I found myself nearly on a daily basis negotiating doggedly for less than I needed, turning down money, spending time on projects and busy-work that would bring in little or no income, and underearning in other ways. Today, all these years later, while my life with money has improved profoundly and continues to, I am still amazed on occasion, when I return to this practice after a period of neglect, to discover that I have been drifting back unawares toward some of the same places again.

The bottom line
You can, as I said in the very beginning, have more money in your life. You can have it — get it — quietly and simply, without turning your life upside down or driving yourself nuts. No matter who you are or what the circumstances of your life. You can have it by practicing this system.

To review, simply:

  • Don't incur any new unsecured debt, ever — in way, in any amount, for any reason.
  • Understand that all economies are personal.
  • Diversify.
  • Conduct a brief nightly review.

Doubtless there are other effective ways to go about this. There have to be. But this is one that I know works, and it's simple and easy to execute.

I wish you every happiness and success in doing so.

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Louisa
Louisa
8 years ago

Thank you for such an insightful, sane post, written with the unmistakable wisdom of one who’s been through it. Your books, How to Get Out of Debt… and How to Stop Underearning, transformed my relationship with money, and I have recommended them many times. I look forward to reading your book on writers’ block.
I forget, what is “unsecured” debt? Is a mortgage unsecured debt?

Leslie
Leslie
8 years ago
Reply to  Louisa

A mortgage is secured debt…it is secured by your house. Credit card debt and personal loans are examples of unsecured debt.

Joe
Joe
8 years ago
Reply to  Louisa

Secured debt is where an asset is tied to the debt — don’t pay your loan, they can repossess it. Unsecured debt is where you just promise to repay the loan. If you don’t, they can definitely go after your other assets but there’s not a particular one that you need to give up.

aib
aib
8 years ago
Reply to  Joe

I am in afghanistan working in a combat zone. The money is good and I get tax breaks but I realize that the economy and the unemployment rate have an effect on my life as well as the value of the dollar in my pocket. When we pull out of here I will go along with but until that happens or our economy picks up, I am here. :=)

SB @One Cent at a Time
SB @One Cent at a Time
8 years ago
Reply to  Louisa

The better way to understand is classifying debts as good debt or bad debt. Certain things in life requires debt. You cna’t grow without it. Papers or bonds is a good debt for businesses, without debt they can’t grow their business. Without mortgage most of us can’t buy home, we have to wait years to become home owner. A bad debt is a debt which doesn’t make you richer and grow. a credit card debt to satisfy your buying is a bad debt. Hope this helps. Enjoyed the articles. Investment diversification, saving money and generating extra income are core to… Read more »

Joe
Joe
8 years ago

That’s quite a wide brush. I bet a lot of ppl in Florida who bought in 2007 wouldn’t classify their mortgage as “good debt”. Further, is student debt good or bad? I think the fact that our society has gone from eschewing debt to justifying large amounts of secured debt as “good” debt is cause for concern. I say that as a Canadian; we have a massive housing bubble that still hasn’t popped. I think any more of this “good debt” that realtors and banks keep shoving on us is going to make our system implode.

SB @ One cent at a time
SB @ One cent at a time
8 years ago
Reply to  Joe

An outcome of a good debt can be bad but that doesn’t mean the need of the loan was bad.Housing bubble is an example.

Jerrold Mundis
Jerrold Mundis
8 years ago

I’ve never been a fan of the idea of good debt and bad debt. I’ve seen far too many people (way far too many) talk themselves into serious trouble with debt by naming something as good debt – from college loans to renting out high-end offices, buying new business machinery stocking up on inventory, getting veneers on their teeth and a multitude of others. Though one can certainly get in over one’s head with secured debt, too (mortgage, car loan and the like), the best working principle for anyone who has or who has ever had any difficulty with or… Read more »

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Louisa

Thanks, Louisa. Glad the books helped. I see that others have covered your mortgage question.

DJ-MoneyforCollegePro
DJ-MoneyforCollegePro
8 years ago

I really enjoyed this post. Especially the bit about how to diversify, and the important of it. It really does help me sleep better at night knowing that all of my eggs (income and retirement) are not in one basket. Gives me a lot more flexibility too.

I Am 1 Percent
I Am 1 Percent
8 years ago

Awesome post!

One other thing that I would add, though it may fall under “Diversify”, is to work and invest in yourself. I have been a self-promoter on the job. I have worked hard and have made it known that I want to advance in my career. Doing this, and networking appropriately, has afforded me so many opportunities and salary enhancements over the past several years.

I’m 34 years old, and a self-made millionaire in terms of net worth.

BlueCollarWorkman
BlueCollarWorkman
8 years ago

The idea of a brief nightly review is a great one. It not only allows me to clearly see where I did good and bad during the day, but also allows me to “let go” of the bad and not beat myself up over it. Not doing a nightly review means that some bad decisions nag nag nag at me for weeks and months… but doing a nightly review means I have to sit down and acknowledge the good/bad, and then can more easily allow myself to learn and move on. Great post!

El
El
8 years ago

Thank you for this, truly a long-term perspective. I’m going to bookmark this. It really speaks to me.

Laura+Vanderkam
Laura+Vanderkam
8 years ago

Thanks for bringing up diversifying income — we normally just hear about diversifying in the context of investments, but it’s wise strategy for money coming in as well. To me, one of the big upsides of the way I’ve built my career (freelance writing) is that I have seen almost all my clients change over but I still keep earning, and without anything close to the disruption losing a “normal” job would entail. I think a growing number of us are living in this 1099 economy (rather than the W2 economy) and it changes your perspective. You can earn more… Read more »

Jerrold Mundis
Jerrold Mundis
8 years ago

Yes. Sooner or later, I always keep in mind, I will lose every client/customer/publisher I now have. Time and the river. So a steady awareness of a need to find the new is necessary. This seems true to me of everyone who is self-employed or owns a business.

El Nerdo
El Nerdo
8 years ago

Great article, long but worth the read! Thank you.

mike crosby
mike crosby
8 years ago
Reply to  El Nerdo

A cliche, where the rubber meets the road, is apropos here. Spot on article.

Laura
Laura
8 years ago

I simply want to say thanks for a truly excellent post to start off my work week. There are very few people I’ll gush over, but Jerrold Mundis is one of them. His book, “How to Get Out of Debt, Stay Out of Debt, and Live Prosperously” is IMHO THE bible on the topic, and it was quite literally the answer to my prayers when I bottomed out some years back (I prayed for help and guidance with my debting problems and the next day in a bookstore that book literally fell off a shelf on my feet). Mr. Mundis,… Read more »

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Laura

Aw, shucks (he said, scraping one foot over the other).

Thank you, Laura!

Marianne
Marianne
8 years ago

Excellent post! We’ve been working to diversify our income over the past year. I’ve been on mat. leave and have had the free time to really focus on it. My husband is just plain talented and able to do a million different things fairly well- he naturally lends himself to earning in a million different ways. I have a series about all the different ways we earn extra money: http://www.preservingpennies.blogspot.com/2012/02/how-we-earn-extra-money-selling-our.html with another post coming later this week. Might be helpful if you are looking for ideas.

Melody
Melody
8 years ago

This article is a great story about personal financial transformation. I also really appreciated the nightly questions to ask yourself. However, I don’t really think we can honestly say that, that for people who depend on the social safety net, and/or folks who have many barriers to saving (for ex ., poverty, low levels of education, non-English speaking, undocumented status, general lack of opportunity, tend to be preyed on by predatory financial practices like payday lending and cash remittance, to name a few) really have the *choice* to go into debt. Emergencies happen regardless of financial preparedness. We really can’t… Read more »

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Melody

There’s always a choice – though it may indeed very difficult to see that and to accept it at first. But when the commitment is absolute, when it is unconditional, a solvent way can always be found to get what is truly needed. I’m perfectly willing to grant that such is not easy, in fact can be downright terrifying, and require a complete paradigmatic shift in consciousness, which is no trivial undertaking, but it can be done. I know it is not easy to throw off or give up a deeply held conviction or entrenched belief to the contrary. Still… Read more »

Economically Humble
Economically Humble
8 years ago

Yeah, never incur new debt is a major one. I also sold many of my books after realizing that I was holding on to books I only read once (libraries are now my best friend). My emergency savings saved me recently and now I also have a $100 mini-emergency cash fund for smaller emergencies like the rare time I need to take a cab home. Oddly, the biggest thing I can do now to save/earn money is to earn my degree and move on! Great post. Thanks for sharing our story. Its good to know we are not alone in… Read more »

Tie the Money Knot
Tie the Money Knot
8 years ago

What an excellent post, thorough and very thoughtful!

I think that a big part of handling money is having self-discipline, as well as understanding the difference between needs and wants. Alos, realizing that expenses must not exceed income. Take these actions together, and one can avoid such situations for the most part (unless caused by unforseen circumstances).

Bill
Bill
8 years ago

Technically, education loans are unsecured debt. There is no asset backing them, but hardly anyone would be able to go to graduate school without them. Are they verboten as well? Do you seriously believe that I am supposed to be paying cash for my masters or doing without?

Laura
Laura
8 years ago
Reply to  Bill

The “asset” in student loans is higher-paying employment. Student loans from the U.S. government cannot be discharged in bankruptcy and a defaulter can expect to have their wages garnished – that is, their “asset” of higher wages “repossessed” by Uncle Sam. (And if the wages aren’t higher, then too bad – they get garnished anyway.) As for paying cash for your master’s or doing without – this black-or-white thinking is exactly what Mundis addresses in his book on getting out of debt. Your choices are not limited to debting or dying. I suggest you read his book then ask yourself,… Read more »

Josetann
Josetann
8 years ago
Reply to  Laura

I think this is the #1 thing you must do. Think about what you want to do. Then think hard about the best way to go about doing it. My wife wanted to be a registered nurse. She found a program that paid for most/all of her tuition and some toward books/supplies. She went to a community college and got an associate’s degree in nursing. She COULD have gotten a 4yr degree with many tens of thousands of student loans…but she graduated with no additional debt and started working as a nurse within two years. Fast forward about a decade.… Read more »

Laura
Laura
8 years ago
Reply to  Bill

Well, I got my MBA without incurring any debt. I had an employer who paid for 2 classes a year, and I took 2 to 3 classes at a time until I was finished. It may be extremely difficult to go full time without going into debt, but why do you need to go full time?

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Bill

“Technically, education loans are unsecured debt.” That’s kind of like saying a corpse is technically dead. Student loans *are* unsecured debt, not technically unsecured debt. “…hardly anyone would be able to go to graduate school without them [loans: unsecured debt]. Are they verboten as well?” Personally, I don’t think anything short of mayhem, carnage, and injury in general of others is verboten. The fact remains that the country is filled with people owing multiple tens of thousands hundreds of thousands of dollars in unpaid student debt with little to no prospect, without radical alteration in their lives of ever paying… Read more »

HillyNapoleon
HillyNapoleon
8 years ago
Reply to  Jerrold Mundis

I agree about student loan debt: It is unsecured… except by the wages you will earn in the future. And Uncle Sam will take his cut first and he will do so while others can walk away from their debt. It’s as close as we come to indentured slavery in this century. So if you still want to somehow legitimize student loan debt in your mind, know that smart people are asking this question: “What is the ROI on the degree?” And that is going down rapidly for just about all of them from the Associates Degree to the JD… Read more »

doug_eike
doug_eike
8 years ago

Debt certainly is poisonous! I always save the money first. If I don’t have the money, I simply don’t purchase the item. In the case of vehicles, I buy used ones at the level I can afford–always for cash. Thanks for the tips!

Rebecca
Rebecca
8 years ago

“If one definition of insanity is to keep doing the same thing over and over and expect different results, another is to keep doing over and over again something that used to work, after the context has changed, and expect it still to work.” I think this is genius. The economy has changed, and we need to adapt as well. When I see people wringing their hands over future job loss, potential foreclosure, impending doom on their financial radar, I want to shake them for not being proactive. Sure, the old style of employment has changed for many, but lots… Read more »

frugalportland
frugalportland
8 years ago

there are two ways to have more money: don’t spend much and make more — you did a great job expanding on those.

HillyNapoleon
HillyNapoleon
8 years ago
Reply to  frugalportland

Mmm. I’m not so sure on the second one. So Jerry, what was that “take any job, no matter the pay” strategy for? Was that for maintaining solvency at all costs? Some ego-deflation that was needed (in your eyes)? Some of you teaching yourself how to work? I ask because for many debtors, taking those sub-par jobs is the thing that puts them into the position of believing that they have to debt. Yes, yes, one can choose not to debt one day at a time. But those choosing between paying for emergency dental work and the back rent that… Read more »

Anne Burner
Anne Burner
8 years ago

Such an insightful post. It’s really given me a lot to think about, and I’m defeinitely going and looking for your books on personal finance.

M.C. Sommers
M.C. Sommers
8 years ago

Loved this article. The title made me think it was going to be just another list of possible side jobs, but Jerold brought up some good points that I really haven’t thought of before. I especially liked the idea of personal economy.

Carla
Carla
8 years ago

Unfortunately medical debt is considered unsecured, which happens to be the bulk of my debt. Diversifying is something I’m working on since I had very little control of the former. I guess for me, its the most difficult thing to do logistically. I know how to do what I know how to do and I feel limited by that. Of course those are my limitations…

Michelle Lynne Goodfellow
Michelle Lynne Goodfellow
8 years ago

I’ve been reading this blog daily for months, and have never felt compelled to comment until today. This post really spoke to me.

What appealed to me most were the nightly review questions. I’ve used this technique for other areas of my life, but never finances – and I need to!

I’d like to thank Mundis for sharing all of this great information.

(You also made a book sale – I just downloaded the Writers Block book.)

Jerrold Mundis
Jerrold Mundis
8 years ago

Thank you, Michelle!

I hope you enjoy and profit from my book on breaking writer’s block, and I wish you every happiness and success with your work.

(And I’m actually startled by the number of GRS readers of my blog post who bought and downloaded this book yesterday and this morning. Seems to be a fairly deep literary undercurrent here.)

Edgar Allen Floe®
Edgar Allen Floe®
8 years ago

Credit Cards wouldn’t be so terrible if the interest rates were lower and more reasonable. BUT, the reason why the rates ARE so high is because of credit cards, generally, being unsecured. Credit Card companies are compensated for offering a credit line by charging high interest against outstanding balances. But again, I think the rates on more credit cards should be lower, regardless of credit score.

WR
WR
8 years ago

The insidious things about credit cards has little to do with the interest rate and much more to do with the psychology of borrowing against future earnings.

Credit cards make people tend toward impulsivity and utilize lower levels of research on purchases.

There is mounting evidence that people pay far less attention to prices when they are paying with a credit card vs. paying with cash.

It is certainly true in my experience.

WR

Janice
Janice
8 years ago

Loved this article, and so glad to know Judy Collins is doing well; her album “Wildflowers” was a fave back when….

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Janice

Remarkably, she’s still doing 40-50 out-of-town concerts a year – in addition to writing and running her company. She has more energy and commitment than most people half or even a third her age. And, to my ear anyway, her voice is still as liquid and clear as it ever was.

Andrew
Andrew
8 years ago

“I cut expenses to the bone, then cut into the bone.”

Without further explanation, this overused butcher-shop analogy is meaningless.

Other than that, this is a useful article.

El Nerdo
El Nerdo
8 years ago
Reply to  Andrew

It means that you can always cut deeper than you initially think once you’re accustomed to a lower level of expenses. E.g., how to be “poor” on 1/4 million bucks a year: http://www.thefiscaltimes.com/Articles/2010/12/07/Down-and-Out-on-250000-a-Year.aspx#page1 To understand how this relativism works, read here: http://earlyretirementextreme.com/how-i-live-on-7000-per-year.html the paragraph that mentions the “Wheaton eco-scale” is about mid-page: Consider people living at different budgets, e.g. $100k, $80k, $60k, $50k, $40k, $30k $20k, $15k, $10k, $7.5k, $5k, $2.5, $1k, and $0k. Now, what Wheaton observes is that people who spend one or two levels below you are inspiring to you in terms of budget reductions. People who… Read more »

Dan
Dan
8 years ago
Reply to  El Nerdo

What it really comes down to is lifestyle choices. For every step down you make, *something* has to give. TBH, that’s not really very earth shattering. At some point, there’s a limit.

I live in one of those areas that your link references as “how to be poor on $250k/yr.” So what goes? Kids. My wife and I don’t want kids, and as a result, we can enjoy a better lifestyle than we would with them.

I don’t have any desire to save every last *possible* dime. I want to enjoy some of it while I still can.

El Nerdo
El Nerdo
8 years ago
Reply to  Dan

Right, but this article isn’t about you personally unless you’re financing your lifestyle with debt. The author of this article was $110,000 in debt, with a $3,000 monthly expense budget, and only $350/month of guaranteed income– anybody in such situation has to make severe adjustments or suffer the consequences. And his point was that when in need you can always cut more than you initially think (the bone metaphor). The link to the quarter-million-dollar-and-broke I posted was simply to illustrate lifestyle inflation. You can live paycheck to paycheck (or worse) no matter how much money you make, and you can’t… Read more »

Dan
Dan
8 years ago
Reply to  Dan

El Nerdo, If your take away from the “quarter mil and broke” article was simply about lifestyle inflation, I think you missed the point. I can’t buy a decent townhouse close to my job for less than $250k. It is *expensive* to live where I live. I rent a basic, 725 sq ft 1-bdr apartment in the suburbs, and it costs me $1200/mo. The apartment is far from luxury, but definitely habitable. Sure, it’s in a decent location, but it’s in a *safe* location. It’s also 10 minutes from my work. I also think you’re blowing off taxes too quickly.… Read more »

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Andrew

I think El Nerdo has pretty much covered this.

Dogs or Dollars
Dogs or Dollars
8 years ago

Great read! Very thought provoking, especially this part for me… “I’m not suggesting that you simply work more hours each week: the key is to be sure that your diversifying activities are high-paying – in the sense that they bring you, ideally, at least twenty-five percent more per hour than you make at your job or normal work.” My income diversity involves my day job ($$$) combined with money making hobbies ($). I justify this in a lot of ways. Its supplementary income, although income I don’t really need. I enjoy them more. It keeps avenues of employment open, additionally… Read more »

Clint
Clint
8 years ago

I was planning to make a similar comment. Great post, and last year, I started practicing this idea of diversifying and earning more income by promoting my abilities. But I, too, don’t earn more or even the same from them as I do from my 9-5, partly because the job I do best is the one that employs me full time. I’m happy to be bringing in extra money, but don’t think that would be the case if I tried getting MORE for these side services. Maybe I need to buy to book to figure out how to boost it.

Jerrold Mundis
Jerrold Mundis
8 years ago

You’re welcome.

Certainly not necessary to bring in 25 percent more per hour for such an activity, but to do so is beneficial on a couple of different levels: brings in even more of an increase in your money, cuts down the time/energy needed to do so, gets you thinking in more expansive ways about work and money, and shows you that you can command more in the marketplace than you might have thought you could.

This is a helpful practice for anyone. It’s especially powerful for people who have had a problem with underearning.

bg
bg
8 years ago

Interesting article. The daily review is new to me and I think I’m going to start with it, it definitely sounds like it could help me seeing my patterns better 🙂

Josh @ Live Well Simply
Josh @ Live Well Simply
8 years ago

Diversification is good to a certain degree. However, I’ve discovered in diversification that you can get ‘too many irons in the fire’ as it were which just leads to a high stress life as you try to juggle it all.

Sam
Sam
8 years ago

It is nice to hear someone rallying against unsecured debt. Often times I feel as though we are the only ones living on a allowance system with no credit cards in our wallets.

a reader
a reader
8 years ago
Reply to  Sam

Yes, after repaying all my debt (e.g., mortgage, personal loan), I switched to a cash-only “allowance” (i.e., budget) system and have found that I spend less than I did when I paid with credit, even discounting having had the budget. It’s probably psychological. It is somewhat weird to open a wallet full of cash separated by categories to pay for purchases, but it’s saving me money and I’ll be able to realize some goals earlier than anticipated as a result. I too have income diversity but like many other commentors, my secondary income source is not a high-paying one, although… Read more »

lenderguy
lenderguy
8 years ago

A big shout out to my homie Epictetus! I’ve been wondering how things were going with the latest book! I want to pick a bone with your distinction between secured and unsecured debt. I realize you were trying to give people a take-away that was easy to remember, but I think it falls short, and that is particularly harmful to the people who need it most. Your logic could have used some elaboration. Interest charges should be considered a part of the purchase price, period. I’m trying to think of various secured purchases that should be considered “good” debt, and… Read more »

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  lenderguy

Yo, Lenderguy. Long time no see, in a manner of speaking. (Lenderguy and I used to ride a financial river together, virtually, on a wild and woolly frontier of microlending a few years back.) There are indeed certain unsecured purchases that are reasonable for *some* people – a minority: those who have never had a problem with debt, or underearning, who have always been clear and effective with their money – to finance. For most people, incurring unsecured debt is inimical to increase. Also, as I have always said, anyone acting foolishly or unclearly can get themselves head over heels… Read more »

Kevin A.
Kevin A.
8 years ago

I like these ideas and have generally lived by a similar strategy. Regarding the first point on unsecured debt, I’d ask where Jarrold (and GRS readers) would place student loans and even some mortgages. A decade ago, it seemed that we placed debt into two simplistic categories – good debt and bad debt. Bad debt was the unsecured type described here. Good debt was debt that was an investment in your future. A house, a college education and maybe a car if the car was necessary for your commute. I now question that dichotomy. Looking back, borrowing to buy our… Read more »

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Kevin A.

I’ve never subscribed to the good debt, bad debt idea, Kevin. I’ve seen, as I’ve said elsewhere, far too many people talk themselves into a serious problem with debt by naming various borrowings “good debt.” And sure enough, it’s easy to get in over one’s head on a mortgage, and sure enough, the market can fall resulting in being upside down on a house – just as the equities market can fall resulting in a loss on any given stock or stocks. Regarding, student loans: they’re unsecured debt pure and simple. Here’s a rough rule of thumb: If a pawnbroker… Read more »

Laura
Laura
8 years ago

Love this post! I read “How to Get out of Debt…” years ago, and re-read it several times (I re-did my 100 things lists through the years, too). I enjoyed hearing about the “journey”, too and how 1 decision leads to another leads to a new connection, which leads to a new opportunity, etc.

AverageJoe
AverageJoe
8 years ago

I like the idea of the nightly review. I find that the longer I prepare and then review my work, the more thoughtful it becomes.

My Money Talk Online
My Money Talk Online
8 years ago

I need to check out your book How to Get Out of Debt. While I try to keep my debt levels low, I do have debt for mortgage. I try not to have any other type of debt though and it has served me well. Now if I can just brainstorm some ways to diversify!

Jenna, Adaptu Community Manager
Jenna, Adaptu Community Manager
8 years ago

Thanks for sharing your story, Jerrold.

Elaine
Elaine
8 years ago

“first book ever on the subject” ?

Wow, no. Doubt it.

For example:

The Richest Man in Babylon – Clason (1926)

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Elaine

Uh…actually, yes. You may not be familiar with my book. Take a look at the title again: *How to Get Out of Debt, Stay Out of Debt, and Live Prosperously.* The book is about just that. It’s a 300-page comprehensive system comprising multiple concepts and techniques for getting out of debt and staying out. As I said in my article: “It was the first book ever on that subject, to my best knowledge, and it’s been in continuous print since 1988 (updated and expanded in 2003).” And it was, to my best knowledge, and it has been. I’d be happy… Read more »

WR
WR
8 years ago

Excellent article. Once I learned this key I never looked back. One critical thing for me was to reframe what ‘debt’ really means. Consumer debt (or unsecured debt) is self imposed slavery. You are giving up months and even years of your future time and energy for current pleasure. It takes willpower, discipline and strength of spirit to pay cash for your lifestyle but boy does it pay off. I donate 10% of the profit from my book, “The Hero’s Journey to Financial Independence” to a local food bank and homeless shelter. With few exceptions (and no, most of them… Read more »

A Knight
A Knight
8 years ago

A great voice, especially as JD mentioned recently that he’s been encouraging the other contributors to develop their voices. Keep him!

tom
tom
8 years ago

It is important to keep the focus on savings, too.
Pay yourself first in small amounts while you are getting out of debt, to create the habit.
Once you are clear, then keep up the process, so you are not tempted to replace the debt service with spending.

Jaime
Jaime
8 years ago

Good article but I don’t agree that our economy is separate from the national economy. Take macroeconomics please, the national economy affects our economy. Its ridiculous and naive to think that we’re not all interdependent. In 2008 I had a hard time finding a job, I searched for months and the only job I could find was a part-time minimum wage job, I moved to the mid-west where the economy was stronger and not suffering like the west and east coasts. We live in a global world, we can no longer say the world no longer affects our economy. I… Read more »

Clint
Clint
8 years ago
Reply to  Jaime

I think the author’s point is you shouldn’t use the state of the national or global economy as a crutch. Even in the toughest times, there are people and businesses that figure out how to make a boat load of money. Figure out a way.

Jaime
Jaime
8 years ago
Reply to  Clint

Oh. Then in that case you’re correct. 🙂

WR
WR
8 years ago
Reply to  Jaime

with respect: “There is no denying that the larger economy does have an impact, but the most it can generally dictate, barring complete collapse, is the manner in which you earn your living and otherwise bring in money, not whether you can. Your economy is personal.” is snatched from the article above. I interpret his “Your economy is personal” as a fundamental understanding of macro and micro-economics. I have studied both and I wholeheartedly agree with is premise. Ay study of economics takes ‘scope’ into account. From a global perspective, even the poorest Americans fare well against some of the… Read more »

Jaime
Jaime
8 years ago
Reply to  WR

Okay I feel like a tool now. I apologize. Thanks for pointing that out. I should have re-read the article.

WR
WR
8 years ago
Reply to  Jaime

Ha. no worries. I feel like a tool 2-3 times a day…

Jerrold Mundis
Jerrold Mundis
8 years ago
Reply to  Jaime

I think WR covered this pretty well.

njcatherine
njcatherine
8 years ago

This is a great post. I read How to Get Out of Debt, Stay Out of Debt and Live Prosperously back in the 80s, and it really helped me look at myself and my spending. My copy is dog-eared and highlighted and worn-out. Bad thing was, like some addicts, it took a few stints at debt rehab to finally surrender. So, you could say that Jerrold Mundis’s book was Money Rehab #!, Your Money or Your Life was Money Rehab #2, and Dave Ramsey’s Total Money Makeover was Money Rehab #3–and I think third time’s the charm. I finally get… Read more »

jefferson
jefferson
8 years ago

Very good article.. and I will definitely check out your book.

We are currently trying to pay off our debt once and for all, and start a debt-free life. I can’t wait to have the weight off my shoulders.

The sad truth is that the journey out of debt is long and boring.. You can change your mindset, but it takes time.. The old patterns that led to spending for comfort and entertainment are hard to change.. But the end goal is so worth it..

HWolf
HWolf
8 years ago

Living debt free can be done but you have to set priorities and make sacrifices. We enjoy travelling–that’s why we drive inexpensive cars. I love cooking and can eat better and less expensively than take out.

You need to have a mindset that there’s a bigger rush from paying down/paying off debt than from spending.

Elaine
Elaine
8 years ago

It’s very rare that I bookmark a blog post so that I can sit down with a cup of tea and read it thoroughly. This was one of those blog posts. While I don’t agree with everything (the world wouldn’t be fun if that’s how it worked), the post was well-written, informative, and very useful. I look forward to checking out more of your work.

Jerrold Mundis
Jerrold Mundis
8 years ago

My thanks to everyone who posted a comment here and to so many of you for your kind words. I appreciate them.

I think I’ve covered everything in the comments up to now that invited or called for a reply.

I’ll be moseying on now to other, pressing work.

I will check in every day or two for a while to reply to anything else that seems appropriate.

In the meantime, thanks again, all.

MultiMillionaireRoad
MultiMillionaireRoad
8 years ago

Great post, particularly like the four simple tips at the end. Under diversification I was surprised not to see anything referring to “making money work for you rather than working for your money”. Surely part of diversification is to make money streams that you yourself don’t have to work for such as shares providing dividend payments. Thanks once again

Jennifer
Jennifer
8 years ago

I really enjoyed your post. I have struggled with debt for a long time. First with large student loans and now a few credit cards. At one point my student loans were $127,190 they are now down to $71,780 but I currently have credit card debt close to $19,000. I earn a decent salary as I have two Master’s degrees but I have not received a raise in about 5 years. I recently cut up my credit cards and gave up a family cell phone plan which is a savings of $1872 a year. I am looking forward to reading… Read more »

frugalportland
frugalportland
8 years ago

thanks for this — you’re absolutely right about debt, and perhaps you should include secured debt, too. That seems to be a trouble spot for a lot of people.

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