Forced to be Frugal
In recent times, I've stumbled upon an occurrence that can have earth-shattering ramifications for getting your finances in order, as it essentially forces you to be frugal and mindful about all purchases and expenditures.
Irregular pay intervals. We've got a pretty sweet deal most of the time as employees in the United States. Do your work, and you get paid. Makes sense, right? But life hits small businesses just as hard as individuals sometimes, and as a result, employers are forced to do the unthinkable - postpone the sacred cash cow that is payroll. If you're an employee of a company in such a state, you may only receive partial pay on an unpredictable basis. It acts as one of the strongest catalysts I know of, short of unemployment without benefits or assistance from the feds, to force you to take a hard look at your finances as they exist day to day.
Forgoing payroll is generally a last resort for a small business owner. These are people with a great deal of integrity and pride in their business, and the last thing they want is to not pay their people for work they have already done. But, sometimes it becomes necessary in order to keep things afloat. As an employee, you might take those regular pay intervals for granted, or even further, you feel entitled to them (as you rightfully should - getting paid on time is a standard that is held in the same regard as getting paid in and of itself). What if that regular interval were to stop being so regular? What if you didn't know the next time you were going to get paid, or how much it was going to be?
This one thing flips the entire realm of daily finances onto it's head. It causes you to second-guess every purchase and every bill that comes your way. "Do I really need this? What if it comes down to a couple of these dumb purchases and not being able to pay my mortgage?" This mindset can be a healthy thing to keep close to you even when you are back on a regular pay schedule. It becomes a simple task to avoid certain purchases when formerly there was no way that you could have made it. It's almost like having the mindset of being unemployed when it comes to managing money - you have to stretch every dollar as far as you possibly can, because running out is a very real fear.
As you become accustomed to living such a life, you may well find that your quality of living doesn't change all that much. Perhaps it doesn't change at all. This is an important realization to make when you're under the proverbial boot. When said boot lifts, remember that food tasted the same, and the experiences you value were no more sparse than they were when you had more money.
Now, proverbs aside, - if you've taken our advice, you might have a 6 month buffer fund built up for times exactly like this, in which case you may well be able to continue with your daily lifestyle and just replenish the fund when the cash starts flowing again. But perhaps you tied up your 6 month buffer into a non-liquid investment, such as a car you plan to flip (in which case you also took our suggestion) or a market stock or bond somewhere (again, we have suggested doing this in certain circumstances). Now what? You might have some real penalty for removing that amount of money from a market and turning it back liquid. Perhaps you lose any gains and more by doing so - this is simply an inherent risk of investing a safety net, so it should only be done with the utmost caution.
Life's challenges simply teach you to be smarter, and this wonderful thing called our minds allow us to learn from the experiences of others, as well as our own experiences. That's why the contributing writers of this site do what we do - we'll all just in it to learn from eachother. And also get filthy rich while we're at it.