It seems like there is a rule to raises. Whenever you get a raise, you will find a way to spend every new dollar, and find yourself no better off than before. I was reminded of this when I read a short story by F. Scott Fitzgerald. The story "How To Live On $36,000 a Year" was published in 1924 by The Saturday Evening Post, and gives a very entertaining look at how easy it is to justify living above, or right at ones means.
Fitzgerald did not begin as a wealthy author, but had to work his way up and did find success quickly. That success led to more money and in his words, "because my income had a way of doubling every month. This was actually the case. It had done so for several months - I had made only thirty-five dollars the previous August, while here in April I was making three thousand- and it seemed as if it was going to do so forever. At the end of the year it must reach half a million"
His income increased so quickly there was probably quite a bit of rationalization about living up to a certain standard, and even deserving it, but when combined with the assumption that his wages would continue to rise he moved into a dangerous place where he could think about spending money that he did not have. This, of course, happens and one day his wife, Zelda, asks him why he is so depressed, "'I'm not depressed,' I answered cheerfully; 'I'm just surprised. We haven't got any money.'"
Even without money to actually pay for his lifestyle Fitzgerald continued to ignore his financial situation, "I wasn't poor- they couldn't fool me. Poverty meant being depressed and living in a small remote room and eating a rotisserie on the corver, while I- why, it was impossible that I should be poor! I was living at the best hotel in New York!" Fitzgerald is obviously writing this for effect, and knows that he has no money because he lives in the best hotel in New York, but I know that I have wondered why I don't have any money saved up only to look at the various things I had recently purchased to be reminded by what I could have gone without.
Sometimes, we are able to continue to ignore our financial instability, and in Fitzgerald's case he was able to because he was continuously earning more money, but could not seem to keep his head above water due to indulging in such luxuries as, "having a baby and a trip to Europe" It seems a bit much to say that having a baby is a luxury but according to this story from NPR they are certainly not cheap.
Fitzgerald had a novel solution to get out of the trouble he was in. "I'll just have to get out of this mess the only way I know how, by making more money."
This, actually, is not a bad idea. Sometimes the only way to gain headway on paying down debt is to actually find more work and devote that additional income to paying off debt. This is by no means fun, and if you do as Fitzgerald did, and simply spend the money it will only leave you more exhausted and in the same position as you started.
In the end, Fitzgerald decided to actually settle on a budget and live off of it, but cannot get over the years worth of income he lost. He knows full and well the mistakes that he has made with his spending, but is still unprepared to actually come to terms with living within his means. To sum everything up the key to all personal finance is simply to spend less than you make. This does not sound like fun, but will eventually lead to less stress and financial freedom. You can read the whole story here, and let us know what you think of F. Scott Fitzgerald's habits.
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