As the economy grew worse in 2009 and 2010, I began to see the very real possibility that I might lose my job. At my workplace, offers of overtime were eliminated, and each employee was asked to do more with less. Our once cushy perks like free gym memberships, paid birthdays off, and paid lunch breaks ended. The performance threshold to receive bonus pay was raised to an unattainable and demoralizing level. Some members of upper management that had been with the company since its inception began to leave. We were all asked to submit ideas of ways our company could cut expenses to save money. So, in a sense, "the writing was on the wall".
As these events took place, I began to prepare for a possible lay-off. My income made up a little over a third of our household income. I knew that even with unemployment, we could not survive the loss of my income without several changes in the way that we handle our personal finances. The following are some steps that I took to improve our finances so that my family could survive my potential job loss.
Discovering how much money I make and how much I spend each month The first thing that I did was write down all of the money that we earned, on average, in a month, and what and how much our average expenses are each month.
Learning to Differentiate Between Wants and Needs
I took our list of monthly expenses, and I broke that into two groups, wants and needs. Needs are things like, food, shelter, and insurance. Wants are things like vacations, entertainment, shopping trips for the sake of shopping. I then thought about ways to lower my expenses for both my needs and my wants.
I took our list of monthly expenses, and I broke that into two groups, wants and needs. Needs are things like, food, shelter, and insurance. Wants are things like vacations, entertainment, shopping trips for the sake of shopping. I then thought about ways to lower my expenses for both my needs and my wants.
Lowering How Much Needs Cost
I took my list of needs and worked on ways of reducing the expense associated with those needs. I have a low mortgage at a decent rate, so there really wasn't a way to lower this expense. I did call my car insurance company, and by correcting the status of my three older children to reflect that they are away at college rather than living at home full time, I was able to save $55 a month on my premium. I called my telephone company, and by eliminating some infrequently used services, I was able to save $52 a month on my phone bill. By ensuring that no one did laundry unless it was for a full load, and by encouraging my teenager to hang up her clothes in between changes, and only change outfits once a day, I was able to reduce my monthly water bill by $19, and I was able to save an additional $8 to $10 a month by making certain to pay my water bill on time so that I wasn't hit by the 10% late fee. I spent $20 at my local home improvement store to buy a timer for my hot water heater. You don't realize how much of your electric bill consists of heating water. I lowered my electric bill that was normally around $120 to around $68 a month, which saves me $52 a month.
I took my list of needs and worked on ways of reducing the expense associated with those needs. I have a low mortgage at a decent rate, so there really wasn't a way to lower this expense. I did call my car insurance company, and by correcting the status of my three older children to reflect that they are away at college rather than living at home full time, I was able to save $55 a month on my premium. I called my telephone company, and by eliminating some infrequently used services, I was able to save $52 a month on my phone bill. By ensuring that no one did laundry unless it was for a full load, and by encouraging my teenager to hang up her clothes in between changes, and only change outfits once a day, I was able to reduce my monthly water bill by $19, and I was able to save an additional $8 to $10 a month by making certain to pay my water bill on time so that I wasn't hit by the 10% late fee. I spent $20 at my local home improvement store to buy a timer for my hot water heater. You don't realize how much of your electric bill consists of heating water. I lowered my electric bill that was normally around $120 to around $68 a month, which saves me $52 a month.
I looked at our grocery bill last, and realized that I needed to make some changes to save even more money. At first I was really excited about the thought of clipping and using coupons to save money, but in the end I found that I was buying items that I normally do not buy and spending as much or more money than before. Two of the grocery stores in my area accept coupons from online, so I still download and print them and will use one if it is an item that I normally already buy.
The best way that I have found to save money on groceries though is to eliminate pre-packaged foods. I cook almost entirely "by scratch" now. When I go grocery shopping now, my first stop is the produce section. At one of the regional grocery chains, they will often package produce with a few blemishes at markdowns of 70 to 90% off. Just this week, I got a four pound bag of green beans and paid $1. Maybe 4 or 5 beans out of the whole bag had a few spots on them, the rest were perfect. I was also able to get 12 peaches for $1 this week. Two of the peaches had soft spots, the rest were fine. After checking out the produce section, I go to the meat section, and one of my local grocery stores has a section for meat that is close to its expiration date and marked down 50 to 75% off. I buy some of these meats if they still look fresh. The same grocer also offers chicken leg quarters at 29 cents a pound to 59 cents a pound in a 10 pound bag. I also buy a lot of rice, pasta, dried beans and lentils. Another store has a day that they mark down their bakery items, and if I see something that I like, I take it home and freeze it until I am ready to use it since most breads, cakes and donuts will freeze well. I also shop at local farmer's markets and grow a few of my own vegetable to lower our grocery bill.
When I cook our meals for the week, I plan our meals around what produce and meat I bought on sale and fix beans and/or rice on the side. When I get home from the grocery store, I go ahead and de-skin the chicken and separate the legs from the thighs and freeze them, I do this with the other meats as well, and I do not defrost any of the meats until I am ready to use them. If I am going to have a hectic day, I just put some of the meat and chop up some of the marked down vegetables and toss them into the crock pot with various spices and let them cook while I am out the next day. The meal always comes out hot, filing and delicious. So far, I have been able to lower our grocery expense from around $800 a month to around $350 a month.
Making all of these small changes in how much my needs cost adds up to around $556 in savings each month.
Lowering How Much Wants Cost
I know many people think that when times are hard they will just eliminate any "unnecessary" expenses. I have found that If I want to make and keep a frugal budget, I have to be realistic. It is unrealistic to expect that I'm never going to spend another dime on TV shows, dinner out, going to the movies or shopping for new clothes. There are many things that I have done to lower how much my wants cost so that I don't end up feeling totally deprived. I have found that making and sticking to a money saving budget is a lot like dieting, I have to allow myself little indulgences in moderation, so that I don't end up splurging and blowing my diet when I feel too deprived.
I know many people think that when times are hard they will just eliminate any "unnecessary" expenses. I have found that If I want to make and keep a frugal budget, I have to be realistic. It is unrealistic to expect that I'm never going to spend another dime on TV shows, dinner out, going to the movies or shopping for new clothes. There are many things that I have done to lower how much my wants cost so that I don't end up feeling totally deprived. I have found that making and sticking to a money saving budget is a lot like dieting, I have to allow myself little indulgences in moderation, so that I don't end up splurging and blowing my diet when I feel too deprived.
I got rid of our $120 a month cable bill, and I pay around $30 a month for DVD and streaming from Netflix. We also watch several of our favorite Network TV shows online for free at the website of those networks. It is normally a day or two after it shows on network TV before it is posted online. We also go to the library and check out up to 10 DVDs at a time for free. Living in a family of bibliophiles, we normally spent around $50 a month or more on new books, we now check them out for free from our local library, and if our library doesn't have a copy, they request it from a library that does through the "inter-library loan program".
Most of my local movie theaters charge $5 to $10 for one movie ticket. There is a regional movie theater that we go to when we visit some of our family that charges $1 to $3 a ticket for a movie that's been out for a month. When the last installment of Harry Potter and the new Conan the Barbarian movies came out this summer, this is how we went to see them. Six of us went at the cost of $1 each, for each movie. You can do the math, we saved a bundle! If you will check around, there are many reduced cost theaters throughout the country.
The few times that we go out to eat now as a family, we try to go somewhere that has lunch specials, and we normally order water with lemon slices to drink instead of our usual tea or soda. There is one Chinese restaurant that we like in particular. Normally, when we would order off of the dinner menu, entrees were $6 to $9 each; drinks around $2 each, and you would have to order your eggroll ($1) and your soup ($1.65) separately. When we go there now, we go during the lunch special. Most of our favorite entrees are priced under $4 at this time, and they come with the rice, eggroll and soup. There is no charge for water and lemon. So what cost one person $10.65 or more now costs $4 per person. Many "sit-down" restaurants offer lunch specials that will rival the cost of items you buy through the fast food drive through.
Many people are divided over whether new clothes shopping is a "want" or a "need". Regardless of how you classify this expense, there are ways to save when shopping for clothes. I wrote an article about how to save money when shopping for children's clothes, which you can read here.
We also now do more free things together as a family. We take more walks in parks and take camping trips together. We have game nights at home instead of going out. Even if you don't have children at home, you would be surprised how many adults still enjoy board or card games. We sometimes have friends over or they invite us over, and everyone brings a covered dish, and a board game or two, it turns into quite a frugal but enjoyable event.
By employing all of these tactics our family saves around $200 a month by reducing the cost of our wants.
Discovering Ways To Increase Our Cash Flow
In addition to lowering our expenses, I began to look at ways to increase our income. Neither my husband nor I had the energy to take on a second job, but I learned to pick up some extra income as an Internet blogger. We also rented out our spare bedroom and provided meal and laundry services to a tenant for $300 a month. I found a friend or two that needed help with their housework, so I was able to pick up some extra money this way. In the end, I earned about $400 extra a month. I have friends that have earned extra money by making and selling crafts or teaching skills that they already know. Some of them were able to quit their "day jobs" and pursue these endeavors full-time as small business owners.
In addition to lowering our expenses, I began to look at ways to increase our income. Neither my husband nor I had the energy to take on a second job, but I learned to pick up some extra income as an Internet blogger. We also rented out our spare bedroom and provided meal and laundry services to a tenant for $300 a month. I found a friend or two that needed help with their housework, so I was able to pick up some extra money this way. In the end, I earned about $400 extra a month. I have friends that have earned extra money by making and selling crafts or teaching skills that they already know. Some of them were able to quit their "day jobs" and pursue these endeavors full-time as small business owners.
By reducing our expenses by over $700 a month and increasing our cash flow by $400 a month, I was no longer as worried about how we would survive if we lost my income. We have to save and count our pennies, but when I was fired on April 1st of this year I was prepared financially, so that it was not as big of a financial blow. If you prepare yourself, you can emotionally and financially survive the loss of your job. You can read my article on how to emotionally cope with unemployment here.
As every new day seems to bring more bleak economic and financial news it seems to be more prudent than ever for everyone that is employed to begin to think of ways to survive should they lose their job. Since we took some time to honestly analyze our situation and prepared for that possibility, my family was able to deal with the loss of my job much better than if we had not planned for that possibility. It is like that old saying, "those who fail to plan, plan to fail." If you take my advice, and implement some of these saving strategies, but don't lose your job, you could always do something positive with your savings, such as paying off your credit card debt, taking a nice vacation, or increasing your investment in your retirement fund.
