Life is full of "what ifs". A good friend of mine has been facing a situation recently that's caused me to think about a "what if". Ginny and her husband Matt have lived in our suburban neighborhood for 6 years. They moved in when Matt landed a high paying dream job in management in a downtown business. Shortly after buying their new house there journey to parenthood began and the have a sweet 5 year old little girl. Life was clear sailing for these two ... or so it seemed.
While Matt and Ginny thought that they had considered all the "what ifs", the one that they didn't count on was a very sudden closure of the company and demise of Matt's dream job. Like many couples, Matt and Gin ny were striving for thew American Dream. They had purchased their house in this up scale neighborhood and were facing 25 more years of mortgage payments. Ginny was busy raising their daughter and had not been working. Now, quite suddenly, their income was cut almost in half. What to do? What to do?
Matt and Ginny knew that it would only be a matter of time before Matt landed another job, but they needed to plan for cutting their family budget for the long term and not look at the task as a temporary inconvenience. Sure, when he returned to work, they could go back to spending as they had before, but maybe if another "what if" was thrown at them in the future, they could be more prepared.
Whether you're facing a loss of income, or just want to insure a future by setting aside money for that "rainy day", here are a few tips for cutting back on expenses. They are simple ways to save small amounts, but those amounts can add up to more than you might think.
- Pay your bills on time to avoid late fees and additional interest charges.
- Carry only a small amount of cash so that you're not tempted to spend it unnecessarily. Consider using Direct Deposit of your income. If you have to write a check, you'll have time to think before spending on impulse.
- Control your use of credit cards. Leave the credit card safely tucked away at home when you go shopping. Better yet, do as my daughter-in-law does. Lock up the credit card in a safety deposit box at your bank. By the time you go to the effort of retrieving the card to make the purchase, the impulse will have passed.
- Buy only the things you need. Just because an attractive item is on sale doesn't mean you can't live without it or will even want it once you've gotten it home and the initial excitement has worn off.
- Start clipping coupons, and take advantage of mail-in rebates. Be careful here, though. Often, buying the generic equivalent of a favorite product will save you more and be of equal quality.
- Use a list when you go grocery shopping. Never shop when hungry. Studies show that we buy much more than we need when shopping with an empty stomach and the extra items we buy more often are junk food.
- Take your morning coffee or lunch to work instead of buying it every day. Make extra at dinner time to use for the following day's lunch. It sure beats a peanut butter sandwich.
- Always comparison shop to be sure that you're getting the best price on big-ticket items, such as appliances, televisions, audio equipment, and computers.
- If you're making auto loan payments or paying on a high interest rate mortgage, consider re-financing. You may be able to lower your monthly payment.
- Set goals to save for. Write out a list of the goals and hang them where they can be easily seen daily. Re-reading this list will keep you motivated and on the right path.
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