Reduce your expenses than to try to earn more!!!!

Do you ever get the feeling that you are trapped in your current job? Maybe you don't enjoy what you do and you feel you aren't getting paid enough to do it. I bet a little raise would help your spirits, but likely your boss doesn't see it that way. So what can you do? Well, you could start by giving yourself a raise.

Are you a Slave to your Job?
In fact most people are actually slaves to their own debts and not to their jobs, although it often feels as if the job is the problem. Each month bills for all sorts of things come in: credit cards, utilities, mortgage or rent, car payments etc. Since these sources of debt are so readily available we are constantly tempted to make use of them to allow us to temporarily live beyond our means. The key is the 'temporary' part. Once we get sucked in and the payments start going out, we feel trapped. How can we possibly escape this burden? We end up working at unsatisfying jobs, struggling to make it to the next pay cheque and living for the weekend or a few holidays. The only way to escape is to try to earn more or to try to spend less. But, as I'll explain, these two escape routes are not created equal.

The Power of Reduced Spending
So let's say you are Rs.1000 short at the end of a hypothetical month. In order to break even you'll need to get a raise of Rs.1000 or you'll need to cut your expenses by Rs.1000, right? No. Not exactly, anyway. You see it is much more efficient to save Rs.1000 than to get a Rs.1000 raise. This is because of income taxes. In order to make ends meet in our hypothetical month you would need a raise of Rs.1430 (assuming a income tax rate of 30%). In fact, a raise of only Rs.1000 would still leave you Rs.300 short. Rs.1000 earned through employment is only Rs.700 in your pocket whereas Rs.1000 saved is Rs.1000 in your pocket. So, it is much more efficient to reduce your expenses than to try to earn more at the office.

Give Yourself a Raise
As we've just seen, saving on expenses can be a very effective way to improve your personal cash flow. If we extrapolate our hypothetical month above into a hypothetical year, by saving Rs.1000 on your expenses each month, you effectively give yourself a raise of 12 x Rs.1430 = Rs.17160 per year (remember that Rs.1000 saved is equal to Rs.1430 earned). If you could save an additional Rs.170 per month (or less than Rs.6 per day) for a total of Rs.2040 each year, or Rs.2914 before taxes, you'll have just given yourself a Rs.20074 (Rs.17160+Rs.2040) per year raise! So forget your boss and give yourself a raise!

You don't need to feel trapped by your debts. Start by taking a look at your bank statements to see where you could cut some unnecessary spending. Good places to look are credit card interest charges, frequent dinners out, or even high electricity bills. There are opportunities everywhere so get started and give yourself that raise you deserve!