Too broke to save? 1

Too broke to save money? Never

Tips about cutting back on vacations seem downright cruel if you're barely hanging on. But even paycheck-to-paycheck types can save money. Here's how you can do it.
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By Liz Pulliam Weston

Jason Adair is irritated by all the stories he sees about how to save money.

Most of what he reads on the Internet or sees on television seems targeted at people who actually have budget fat to trim, not people who are truly living paycheck to paycheck -- like he is, supporting a family of three on a single income of $40,000 a year.

Take just one bit of typical belt-tightening advice: "Eat out less!" Adair, an information-technology worker from Morrisville, N.C., wonders how that would be possible.

"Please, spending $15 at Arby's every other month is a splurge. My wife and I have not purchased a meal in a real restaurant in about three years," Adair wrote MSN Money in an e-mail. "I want to see an article that helps people that are truly struggling."

Adair's got a good point. When it's a matter of cutting out a few lattes or trips to the mall, saving money can be relatively easy -- maybe not fun, but certainly not excruciating. When you're facing a choice between paying the electric bill and buying health insurance, advice on saving money can seem like a sick joke.
How people really live
Adair's also got plenty of company. Even in the richest country in the world, many people barely keep their heads above water. Consider just a few statistics:

* Half of American households live on less than $48,200 a year, the median household income figure for 2006, according to the U.S. Census Bureau.

* Twenty-two percent of U.S. respondents in an ACNielsen study of consumers worldwide said they had no spare cash left after paying for basic expenses. That compares to 17% of consumers in Great Britain and 15% in South Korea and Germany.

* Some 9.8% of the population lives below the federal poverty line, according to the Census Bureau. (That line varies by household size and composition; for a family of three with a minor child, the income limit would be $16,079.)

* About 47 million, or 15.8%, have no health insurance, the Census Bureau reports, and medical bills are a factor in half of all consumer bankruptcies, according to research by Harvard University professor Elizabeth Warren. Those who do have insurance often pay a big price: Two of five adults who bought health insurance on their own spent more than 10% of their incomes on premiums and family out-of-pocket medical expenses, according to the Commonwealth Fund, which describes itself as a private nonpartisan foundation that supports independent research on health and social issues. When an employer provided the coverage, one of four of those insured spent more than 10%.

I'm not going to fix our broken health-care system or cure poverty in this column. I'm also not going to provide an exhaustive list of money-saving tips. You can check out MSN Money's Decision Center on saving for those. (If you're really in a fix, you might want to check out "How to not pay your bills" and MSN Money's Bankruptcy Guide.)
More from MSN Money
Emergency funds © Comstock/PictureQuest

* How to not pay your bills
* 7 ways to fight off bankruptcy
* 10 ways to curb sleazy debt collectors
* The $0 emergency fund
* A survival guide for the uninsured

What I want to do here is provide some food for thought for those of you who have OK incomes and have cut expenses every way you can imagine, but are still floundering. To start: I'm not one who believes that financial problems can be solved simply by chanting the right affirmation, decluttering your "money corner" or burying an upside-down statue of a saint.

But I do believe the messages we tell ourselves have a powerful effect on our attitudes and actions. I've learned, though my own struggles with money and from advising other people over the years, that when we tell ourselves we can't do something, it's pretty much a self-fulfilling prophecy. If we believe that the problem is bigger than ourselves -- that we're entirely the victims of circumstance, that nothing we can do will make things better -- we're stuck.

It's true that we can't change the past, and it may also be that a lot of bad stuff happened to put us in the position we are today. But we do have choices going forward.

If I say, "I can't do this" or "I won't do that," I limit my options. As soon as my attitude switches to, "I will do what it takes to solve this problem," solutions begin to present themselves. Often, they were there all along.

I have no idea what your solutions might ultimately be. But I've watched people with tiny incomes get their financial act together, save money and make progress toward their goals. I've also seen people with substantial incomes fail to do any of the above.

The difference: their attitudes and their choices. You do have a choice about whether to save, and your attitude can make all the difference.