Finances & Money

What could you give up when you’re in financial trouble? – Part Two

In Part One of this series, I talked about giving up luxuries if you find yourself in some financial trouble. However, luxuries are just that: expenses unnecessary to keeping us fed, housed and employed. Different people have different ideas of what defines necessary, though. For example, since Stacie is a dietitian, she promotes a balanced diet of fruits, veggies, meats, etc. as essential to our diet. However, a college student with limited funds might think Ramen noodles fill the need to be fed. Who is right? Well, I’ll side with my wife on this one 🙂

For the purpose of this series, I’ll just discuss what we consider luxuries and necessities in our own lives. In this specific part, I’ll talk about a special category called “Semi-Luxuries”, or “Semi-Necessities”. Since I wanted to classify our expenses based on how dire our circumstances were, I had to create a third category to cover a major hit to our income, but not a total catastrophe. We’ll save that for Part Three.

Giving Up the Semi-Luxuries

If things started to get real tight and we needed to give up more than the easy things (cable, home phone, etc.), then the following items would be on the list. Giving up these expenses would cause significant inconvenience to our lives, but we would still be able to get by without them by using less expensive or free alternatives:

NOTE: I’m only going to cover expenses that we still pay for monthly. That’s why you won’t see our MINI Cooper in this list, since it’s already paid off. You might see it in Part Three though.

Honda Ridgeline:

I bought my truck back in March 2006 thinking that I, as a new homeowner and a potential future parent, we would need the hauling and seating capacity. Experience has proven otherwise, but at this point, it’s hard for me to give up the truck because it’s nice to have the higher seat view, room and capability to haul stuff.

If we got hit hard financially, though, I think one of the first things to go would be the truck. That’s a $450 monthly payment and about $50 in monthly insurance premiums, for a total of $500 monthly “savings”. I would rely on driving our 1997 Pontiac Grand Am with 128,000 miles, which has been paid-off for a few years now, and Stacie would continue driving the MINI Cooper.

Cellphones:

If all heck broke loose and we had to cut back, I don’t think we could give up our cellphones entirely. As I mentioned in Part One, our home phone is the luxury, not the cellphones. If we needed to, we would reduce our plans from our current 1000 minute plan down to prepaid plans. The reason we don’t do it now is because we use so many Verizon Wireless In-Network minutes (over 1500-2000 per month) talking to friends and family. If we went prepaid, we would have to severely cut down on our phone calls. Since we can’t easily visit many of our friends and all of our family without a few hours drive, we like having the capability to call them.

Based on some conversations, it sounds like we could get enough minutes for $20 per month for each of us, which would be $40 per month total. Right now, we pay about $80 (after taxes, fees, etc.) for our shared plan. We would save $40 per month by getting prepaid phones, but I’d most likely lose the phone number that I’ve had for the last 6 years.

Internet:

Right now, we pay $27 per month for Dry-Loop DSL, which is DSL without the accompanying phone line. We have a few options to replace our internet access for free, but with some inconvenience. Although it’s great to have internet-on-demand, we could go to the library, coffee shops, or just roam around the neighborhood to find free wireless internet.

Heating and Air-Conditioning:

Stacie likes it to be warm in the house and I like it cool, and that costs us probably $100-150 per month more than if we kept the house somewhere around 70 degrees while we’re there (we keep it down to 65 when we’re not) during the winter and just not using the A/C in the summer.

Student Loans:

One benefit of student loans is that you can defer them in times of financial need. Depending on which of us (or both) would qualify for deferral, we would be able to free up $150, $200 or $350 per month for other bills by deferring one or both of our loans.

Pool:

Our pool is becoming the bane of my existence. During the 6 months of the year that it’s open, we spend about $1200 (some years are less than others). If I spread that out to a 12-month calculation, we could save $100 per month by not running the pool.

Why didn’t I put the pool into the luxury category? Well, it certainly is a luxury, but you can’t just NOT open the pool one year and expect it to be fine. We would have to drain all of the water out of the pool, or else risk having a murky cesspool breeding ground for disease and mosquitoes. The electricity used to run the sump pump would probably be about $50 (guessing) and it would take days to drain, but totally demolishing the pool would cost thousands. Basically, if you have a pool, you need to open it every year or face other problems and even more costs when you do eventually open it.

TOTAL SEMI-LUXURY SAVINGS: $917-1167

As you can see, we would make a significant gouge in our monthly obligations by giving up semi-luxuries. A good portion is just a deferral of our student loans, which aren’t luxuries or necessities, just debt. If you combine all of our savings from part 1 and 2 together, we can make $1214-1464 total of room in our budget to help cover our basic living expenses, such as our mortgages, grocery budget, utilities, education (my masters), gas, etc.

Part Three will discuss what we would do if we hit total financial catastrophe and needed to dig deep into our essentials. Let’s hope it never gets that far!