Drastic Household Cost Cutting
Things to Do to Slash Daily Living Costs During a Financial Crisis
Nov 14, 2007
There are many ways to cut household expenses over a period of time, including setting a household budget, refinancing high interest debt and understanding your spending patterns. It is a different situation when there is a financial crisis or job loss, and costs have to be cut immediately in order to be able to pay the mortgage.
Financial experts recommend a three- to six-month emergency cash fund, but many families do not or are not in a position to take that advice, and live paycheck to paycheck. In a crisis, budgeting isn’t as important as slashing spending right away.
If sudden job loss or a medical emergency hits, people need to take sudden and drastic action in order to be able to pay for life’s real necessities. Part of the solution is to determine what a real necessity is.
Saving Money on Food
Without question, food is a necessity, but during a major financial jolt, the choice of food becomes a matter of sustenance, rather than preference. Normally, items that are less desirable get pushed aside for more tasty choices. In crisis, it is time to reach into the back of the cupboards for items that may not be tempting, but will stave off hunger, and save a trip to the grocery.
When dollars are precious, it is important to get as much food for as little money as possible. Generics may not have fancy packaging, but have as many calories as a brand. Overall, the less packaging the better, since bulk food will likely cost less. Spend a dollar on a cheap calculator to compute prices per serving to be sure.
Be open to trying new sources for food, including dollar stores, bakery shrift stores and big box discounters, and buy only what is cheap or on sale. Quantity is more important than quality, but be sure it is something you will eat. Make sure to check expiration dates. Clip coupons and only buy what you need. Individually wrapped snacks are extremely expensive, as is canned soda.
Saving Money on Daily Living
In a financial crisis, there is buying new clothes is something that can be delayed. Except for clothes necessary to job hunt, virtually any items not threadbare will suffice. Reach into the back of the closet for little worn items that will keep you warm and dry.
This is not a time for large or even small entertainment purchases. Daily newspapers and magazines should be passed on. A local library can offer papers for free and will often have Internet access. It is important to curtail daily extravagances during a crisis.
Libraries also lend movies and books. Return them on time to avoid late fees. Second-run theaters offer big savings. Skip the high-priced concessions, it’s only two hours. Microwave popcorn is cheap and healthier than movie theater snacks.
Consider other ideas for generating income, including yard sales, part time jobs and Internet auctions of unused items. There are companies that will broker your items on the major online auction sites. Fees for this are a substantial premium of the sales price, but it is essentially found money.
Longer-term solutions may be necessary if the job situation does not improve in a month or two. Recurring monthly fees that were not considered excessive before will now eat into a large portion of the household budget, competing with housing and food.
Eliminate services that are not vital, such as fitness memberships, premium cable channels and extra features in cellphone contracts. Consider going as far as canceling cable or Internet services, or other monthly items until the crisis is over. Take into account any termination fees to calculate if it is worth it.
A job loss is an unpleasant situation, but taking serious action immediately can help avoid long-term consequences to your credit history or personal situations. It may turn out that all those items were not really important, and they won’t be needed when the crisis is over.
