Living Within Your Means

Living Within Your Means When I was  listening to Rita Careys speak last night, I heard her touch upon some great budgeting advice and it is worth repeating. Rita listed some of the most critical things to do  when you  first lose your job.   One of them  is to reassess the family budget.   Not just in your head, but on paper.  Here is what she recommends with some of my commentary: 1) Make a list of all the expenditures for the month (be honest, food, clothing, gas, mortgage, insurance, hairdresser, cable, phone, heat, electricity, everything) 2) Eliminate as much discretionary  spending as possible (do you NEED to keep all those magazine subscriptions, what about the double lattes 4 times a week at Starbucks? do you need those too?   The better you are here at cutting costs, the better off you will be in the long run, get serious) 3) How long can you afford to support the expenditures?   Be specific, how many months before you have used all your unemployment.   Avoid at all costs tapping into your 401K. If it gets to that point, please consult your financial planner who can give you other alternatives. Now you really know what your time-frame is.   This allows you to build a Plan B.   If by that date, you have not secured employment, what will you do?   You  will need to implement Pan  B now.  If you  have identified today that you need a  holiday retail job  in early Decembertoo late.   Most of the  holiday hiring has already taken place.   Sure, some of still available,  maybe not the ones that would interest you the most.   With a little forethought/planning, you can lineup that Plan B job today,  and  avoid panic mode. Eliminating discretionary spending is difficult.   I remember when my husband was out of  work, he stayed home with the boys 3 days a week to cut our daycare costs.   While this was fiscally good, it limited his search capabilities. We canceled the weekly subscription to the local paper.   We even cut back on the cable to the minimum tier (we only watched 3 of the 1000 channels anyway).    I  brought my lunch to work.   We hunkered  down and boy, was  it hard.   It was worth the sacrifice.  I recommend everyone experiences what it is like to do without for  awhile. My mom  used to say  do you  WANT it or do you  NEED it when we went shopping for clothes.   This is a great way  to check spending. Whether employed or not, maybe, just maybe, given the way things are today, we should all be asking ourselves do you WANT that or do you NEED that.