What could you give up when you’re in financial trouble? – Part One
During the holiday season, we give thanks to family and friends, but we can also use this time (and really any other time) to think about what we would do if we were in financial trouble.
We all have different life situations, and different levels of comfort. We range from singles, marrieds, widows, partners, families and single parents, and may be living a frugal lifestyle on the bare minimum of state/federal income, single or dual incomes, or may even be millionaires. I can’t write about all of your situations, but I can write about our own to give some insight into what you could do during financial trials.
Giving Up the Luxuries
I went through our budget to see what kind of “luxuries” we have and what would be on the quick-hit list of things to cancel/sell-off to help create some extra room in our monthly budget. Some items are bigger than others, and are thus more useful to drop when things are tighter.
We all have different ideas of what a “luxury” is. For us, it’s our cable, gym, dining out and some other categories. But for you, your car may be a luxury. For others, you may not be able to survive without cable TV. But the goal here is to make an effort at classifying our expenses and learning what we can do without when it matters. In parts Two and Three, I’ll talk about our “Semi-Luxuries” and “Essentials”.
Cable:
Obviously the first little luxury that would go is cable. For many of you, your bill is between $50-150 and even higher. For us, we pay about $20 per month for basic cable. We pay for cable in order to get clear reception of network channels rather than trying to mess with an antenna or spending loads to get a bunch of channels that would only waste our time.
Gym:
Although many bloggers abhor gym memberships because they seem to be a waste of money, Stacie and I actually only pay $25 total per month for both of our memberships. We belong to Bally Fitness and went through the 3 years of $100 total monthly payments in order to get down to the special post-contract rates. Since we also have a free “dumpster treadmill”, and can work out in many other ways than at the gym, we could do without this monthly drain if needed.
Home Phone:
Many of you pay between $40-90 per month for your home phone bills, but Stacie and I use Vonage’s 500 minute plan and only pay about $20 per month. However, we also have cellphones and barely use the home phone. We do like to have the home phone so that we’re not giving out our cell numbers, but if we needed another $20 per month, we could give up this luxury.
Eating Out:
Our monthly budget for dining out for lunch (me) and dinner (us) is $300. If we never dined out, we would probably need to bump our grocery budget up by $100. Savings here would be $200 per month.
Parking at the Metro:
I ride the metro to work, and we’re walking distance to numerous bus routes and 2 metro stops, but since I’m going to school, I drive to the metro twice per week to save 20 minutes of walking each way. However, most times I end up having enough time that I could walk home (if I had to). I pay $4 per day to park at the metro, so walking those 8 times per month (twice per week) is a $32 savings.
TOTAL LUXURY SAVINGS: $297.
This doesn’t seem like a big savings (to us) because it wouldn’t do much towards our monthly bills if either of us lost our job. However, it’s a start, and could pay for our more essential utility bills if that’s all the help we needed. These luxuries are things we could easily give up right now, but we’re keeping them because we can pay for them.
What are your luxuries? These are expenses you could easily do without today if you had to. Be honest with yourself. Oh, I should tell you that tomorrow I’ll be posting a “Semi-Luxury” category that are almost essentials, but not quite. These are items that would make your life difficult to live without, but you have other fairly easy and free alternatives. Here’s a hint (internet, extra vehicles).
I could make some serious cutbacks in the going out / clothes etc. budget. I reckon I could cut down by about £150 a month that way.
I don’t do it because I don’t have to, and as a single person, I need to go out sometimes, or I’ll never talk to anyone.
I could get rid of the tv, that would save me about £10 a month for the tv licence.
I could save money by not putting away as much for gifts and vacations – probably comes to about £80 a month.
Altogether then, I could save £240 (=$480) a month. But it wouldn’t be very much fun.
Plonkee, you’re right. It wouldn’t be much fun, which is why we take advantage of times of abundance when we can afford these things. People chastise us for having 3 vehicles, but we can afford it (although it means we’re paying off our debts more slowly). If we couldn’t afford it, we’d take more drastic measures by cutting luxuries, then those semi-luxuries, then the essentials.
However, we all hope to never need to dig into the essentials budget, don’t we?
Hey Clever Dude!
I might have an idea for you to pursue about your home phone. You say you normally use your cell phones, but you don’t want to give those out to everyone.
What my wife and I have done is set up a GrandCentral number. http://www.grandcentral.com/
This allows us to have a new “home” number that then rings both of our phones. We give this number to blockbuster, and other people we don’t really want to talk to. The nice thing is:
*It’s Free!!
*It rings both cell phones no matter where you are.
*Separate voice mail that can be retrieved online, and by phone
*All voicemails and calls are logged online so you can block future calls if a person is bugging you [telemarketer, random creepy person]
Now you can’t transfer your current vonage number in, so you’d have to give out a new number, but this might save you that $20/month if you don’t use it that much.
I enjoy your posts, keep it up.
Cable would definitely be the first to go for me. I don’t think I could give up on my Internet completely, but I could definitely scale back my plan. Currently I’ve got the lightning-fast package, and could certainly handle slowing that down to save a few bucks if need be.
You can’t cut the internet! Where would you blog from? That would cost you money 🙂
remember that when you post tomorrow 😉
I’d keep the cable since for us it is only $11 per month. I’d scale back the internet to the $15.99 plan instead of the $39.99 for a $24.00 savings per month. I’d skip the specialty grocery stores that cost us $80 per month (although we’d probably spend $40 bucks or so more at the regular grocery stores), so about $40 per month savings. I’d keep the blockbuster online since it’s a cheap way to be entertained. I’d cut out all eating out of $150 a month which would bring up our grocery budget $50 bucks a month, saving $100 per month. I’d get really cheap on the thermostats, keeping the main furnace at 55 deg F instead of 68, and I’d spot heat rooms with room heaters only when I was in the room. Similarly, in the summer, I’d set the Tstats to 80 deg F and run fans in rooms I was in. This would probably save $50 per month. I’d also use water less, 5 minute showers and if it’s mellow let it yellow…, etc., saving a good $20 per month. I’d cut out all gifts and charity as well, $80 a month on average. I’d keep tithing though to my church. I’d put off all home improvement projects until my finances were ok again, saving about $100 per month or so. I’d drive less since I wouldn’t be going out or going shopping so I’d save a good $40 a month and not to mention the $150 per month shopping (wife mostly). All in all, it looks like I’d save $604 per month if I had to.
I actually went through this exercise recently because I quit my job without having another one lined up, so I cut back a little bit.
The thing I discovered though is that I’m living pretty close to the bone. Despite the fact that I earn a six-figure income, I really live frugally. I cut coupons, don’t eat out too often, don’t buy things I don’t need, etc. I couldn’t cut cable (need internet and CNBC for my website). The one thing is I could eat out even less (we eat out maybe twice a week). I already don’t have a home phone. I don’t go to Starbucks or anything like that often.
Living the way I do, without the luxuries, make it possible for me to do what I did, just quit and only do work when I feel the work is rewarding.
Paidtwice: I didn’t say I’d cut the internet (that’ll be posted tomorrow). However, I do have a number of options for internet (including at work if I had to, but it’s not my employer’s connection).
Ryan: That’s a good list. Isn’t it amazing when you go through your expenses and add the number up and see how much you’re spending on “things you can do without”? You’ll see what my total “luxury” number is tomorrow. It’s probably more than a few readers take home per paycheck, and maybe even in a month!
I can’t believe I forgot about phone. I’d cut off my home phone for a savings of $80 per month (wife overseas long distance calling, I’d tell her all email and internet chat from now on if need be). So now I’m up to $684 per month savings.
My luxuries are spoiling my girlfriend. December through April are the worst months on my wallet.
December = Christmas, February = Valentine’s Day, March = Anniversary, and April = Birthday.
Good lord, those next 5 months are scary!
Much as I hate this, because I love food, our grocery budget is one area we could save a ton of money…it just means I (we) would have to get really creative about planning every meal in advance and cooking everything from scratch. Those are not my favorite things as they are time consuming and I’m not a good cook.
However, realistically we could spend $50 a week to feed our family of 3, instead of $125-150 if we really clipped coupons, bought in bulk, cooked every meal from scratch, then ate or froze the leftovers. I foresee lots of rice, potatoes, and peanut butter in this scenario.
It does not sound fun.
I would get rid of cable, ($30/mo), and drive less to save on gas money.
I just went through this exercise, of checking where I could cut my costs if I lost my job, or just decided “what the heck” and walked.
Reading your posts and the comments has made it clear that I have not cut deep enough. The biggest thing we have decided to do is selling off our rental property and making us debt free. (well, almost)
I’ll have another look.
Thank you for this lesson on financial surgery.
In terms of the home phone issue, I changed our home phone to a cell phone. I had my home phone number ported to the cell phone and by activating a new line I was able to get a free phone. The cost was $10.00 a month. Granted there was an activation fee of $35.00, that I was able to get waived for customer loyalty. In addition, I had all my numbers from my cell phone and wife’s cell phone loaded into the home phones contact list.