OK so its an understatement to say we are living in a time of huge uncertainty and change. If you have not been personally effected by the Job or housing market then I'm sure you know someone close to you who has. So how do you survive financially and emotionally?
Financially....
You and your family have to resolve to be different with the way you spend money. In our family we saw hard times coming last April (2008) and my wife and I sat down and said we needed to change. We analyzed our spending (every penny) from Dec 2007-March 2008 (we use 1 credit card for all purchases except those paid through Bill pay). We tracked every penny we spent in MS excel and categorized it. We saw that we spent a TON eating out, on gas (who did not) and at mid week grocery store runs.
I wont lie it was hard but we started by eating out 2 times a month less, we resolved to cook meals we had all the ingredients to make (cutting down the mid week grocery trips), and we cut out unneeded driving and started cramming the whole family into the small car to save gas.
Its been a year and we've also decided not to pay full price for anything and continued to cut miscellaneous expenses. Today we spend 33% per day of what we spent per day a year ago. We've cut our daily expenses by 66% without changing our lifestyles too much. Our kids don't notice the difference.
Today we also use tools to help us track our spending and save money:
http://mint.com
http://frugality.alltop.com/
A couple MAJOR points:
- Buy what you NEED and not what you want. Its easy to justify...wants as needs. For all purchases over $50 wait 1 day for every $50 you want to spend before you purchase teh item to examine if you really NEED it.
- Track expenses Daily not weekly or monthly. Every day analyze where and how you spend your money. This will help you have a better handle on where every penny goes. It also keeps you focused. If you know that yesterday you legitimately spent too much then today you know you cant spend much. Tracking daily you will soon see the average you spend daily, then you can set goals to lower that number. It took us over a year to drop ours. We set lower daily goals each month.
- Dont be afraid of your money. You have to 'name every penny'. No penny should be unaccounted for. Sayings like I dont know what happened to my cash should NEVER be made. NEVER. We often have more cash that we realized.
- Include your entire family...including the kids. We track our expenses at dinner. We even ask the kids how much they spent that day (they never spend anything). BUt it teaches them important lessons we did not learn from our parents (at least most of us did not).
Part 2 will cover how you lead in these uncertain times. People around you are looking for your guidence but if you are emotionally worn out or scared or worried its hard to lead effectively.
