You can learn a lot about a person by seeing what they do with extra cash they come across. I wrote that there are three things you can do with your extra cash: spend it, save it, or invest it. I’ve used a tactic that has been working well for me and my family when I come across extra cash. That tactic is live like you didn’t have it.

When you are serious about trying to achieve financial independence, financial freedom, or become financially stable, it requires a lifestyle change. The lifestyle changes will include sacrifices, adopting financial tactics, and doing things much different than what you’re used to.

Here’s what I mean by living like you didn’t have it. Like others, I have a mortgage, a car payment, and other monthly expenses. You are living a lifestyle that you’ve adopted and that lifestyle has a cost and an expense. What happens when some of those expenses go away? You have extra cash that’s not going out anymore.

Let’s say you stopped watching cable tv and cut your tv service off; or negotiated your internet service and it went down $20; or refinanced your mortgage and now your monthly payment is a few hundred dollars lower. My tactic is to continue living like nothing changed. Don’t go splurging on things now that you have extra cash. If you had a $2000 monthly mortgage payment and after refinancing, your payment goes down to $1500, continue living like your mortgage was $2000. Take the $500 and use it for good use. Consider paying extra on your car payment, paying off credit card debt, paying that school loan, paying extra towards your mortgage principal, or anything else that’s holding you back financially.

What if you’re finished paying off your car loan? It’ll definitely feel great but don’t think about using that money on things that don’t support your financial goals. You lived with these payments and expenses for a period of time, adjusted your lifestyle to accommodate, and you lived ok. You may have cut back on eating out, cut back on buying coffee, cut back on streaming subscriptions, cut the cable, cut back on shopping, etc. And you were ok with this lifestyle and hopefully it’s a lifestyle that you’ve adopted. Why not continue with this lifestyle, continue to cut back expenses, and use the extra cash you have to do other things that are financially good for you.

When my car payment was finished, I took that monthly amount and paid extra towards my mortgage principal or bought stocks with it. When I refinanced to a lower rate, I took the monthly difference and paid it towards extra principal. When my kids finished day care, I took that money and put it towards their 529. We continued to live like we didn’t have that extra money and we were using that money for the financial good. We kept the lifestyle we had and we were ok with it.

Any changes to lifestyle is difficult at first but once you get over that challenging period, you start to adapt to that lifestyle and that lifestyle becomes the norm. If it includes cutting back expenses and spending your money wisely, you should be on your way to financial independence. Be consistent with your decisions. The small decisions you make today will have a lasting long lasting effect. If you are interested in following my journey, email subscribe to get alerts of latest posts or follow me on Facebook.