REDUCED to the absolute essence, there are only two ways to become richer than you are: you need more money coming in, or you must reduce the amount going out.
You can become wealthier either way.
If you have $100,000 in a tax-free bond mutual fund earning 5 percent a year, at the end of 12 months, you will be $5,000 better off than you are today.
If you spent $75,000 in 2007, and you spend only $70,000 in 2008, you are also ahead by $5,000.
Of course, you can also follow both paths simultaneously.
The choice of how you end up with more money is up to you. But it is a choice, as Larry Winget makes painfully clear in “You’re Broke Because You Want to Be” (Gotham Books, $20).
Now Mr. Winget, host of the A&E reality series “Big Spender,” which is devoted to helping people get their financial houses in order, is quick to stress that there is a difference between being poor and being broke.
Poor, he says, is a circumstance in which there are no chances for advancement and it takes effort just to survive.
People don’t have a choice when it comes to being poor, he says, but “broke is not a condition like being poor.” Broke, he adds, “is a situation you find yourself in because you are either underearning or overspending.”
And if that is where you are, Mr. Winget’s position is painfully clear: “If you didn’t want to be broke, you wouldn’t be broke.”
It’s that simple. It’s your fault.
“No one else is to blame for your situation,” he writes. “Broke didn’t sneak up on you in the night. A stack of unpaid bills didn’t show up while you weren’t looking. You didn’t suddenly get behind. You chose to spend your money the way you did. Your life is a reflection of the choices you have made. If you want a better life, then make better choices.”
That is the message he repeats in different forms throughout this relatively short book.
Mr. Winget does not offer investment advice. And he doesn’t care if your sole motivation for getting out of debt is to be able to buy overpriced stuff you don’t really need. In fact, he does not find living simply to be overly appealing. “Why work hard to become a millionaire and then live like a pauper?” he asks. “Where’s the incentive in that?”
What you do with the money is up to you. His sole goal is to make sure you’ll have a lot more of it by facing all your financial decisions head on. And he pulls no punches.
Here’s an example:
“If you spend hundreds, or even thousands, of dollars at the mall to make sure you look fashionably cute, then looking good is important to you,” he says. “That’s fine. Look as cute and fashionable as you can afford to look. But if you do it instead of paying your car payment or your utilities or putting away money for your future or your kid’s education, then you have messed-up priorities.”
He offers the occasional money-saving idea you might not have thought of. For example, every time you get your credit card bill, make a photocopy of the payment slip. Then, if you have an additional $10 or $20 during the month, send in an extra payment to reduce your balance.
For the most part, however, his advice for obtaining more income (get a second job) or reducing expenses (eliminate cable television; get a cheaper car) is exactly what you would expect.
But his purpose is not to tell you how to obtain more money if you’re broke, just to convince you that you need to do it: ”Live on what you earn. Period. No excuses. No one cares about your excuses and your problems.”