Fixed costs are consistent expenses such as rent, mortgage, auto loans, personal loans, cable bills, wine club and gym memberships. On one hand they are known, easily budgeted and tracked. However, they can also easily get out of hand and reduce ones flexibility and discretionary spending allowance. Relatively small amounts can really compound quickly and in a sneath fashion. You sign up for a gym membership at $20/month, a wine club at $45, movie rentals for $10/month, then a book club, yoga classes, add another channel to cable (after all, it is only $15) and next thing you know these bits and pieces are equal to a car payment. You already have an actual car payment and student loans and you need to pay off the heat pump in the next 6 months… Where is the money coming from?
I suggest you get out your bills and review them with a critical eye. Are you enjoying the results of spending this hard earned cash? Are you actually going to the gym? When was the last time you watched Showtime or went to a yoga class? Heavy fixed costs can make one feel trapped, without spondity and unable to enjoy their day to day life. When you minimize your fixed costs you have a better chance of living within or below your means. You have flexiblity to handle life’s curve balls as well as unexpected opportunities to play with family and friends, without placing yourself in finanacial hardship.
Consider embracing the mindset of the millionaire next door and live within your means. Set up your budget to spend less then what you earn. Too many people today place themselves, not by intention but by living reactively, in financial tight spots. One or two reduced or missed paychecks and their lives come tumbling down. I’m not advocating you become a tightwad or live without play and only for tomorrow. I am, however, encouraging you to minimize your fixed costs so that you have not financially commited yourself to the point you have no “play” money.
Provided by Nancy J. LaPointe.
Nancy J. LaPointe is a Financial Services Representative of Metropolitan Life Insurance Company (MLIC), New York, NY 10166. Securities products offered by Nancy J. LaPointe, a Registered Representative of MetLife Securities, Inc. (MSI) (member FINRA/SIPC), 4520 Intelco Loop SE, Suite 1E, Lacey WA 98503. MLIC and MSI are MetLife companies. L0311166943[exp0112][WA]