Our lives face challenges when living in austere economic times. The Economist compares the current economic situation to the Depression of the 1930s. The U.S. remains in an economic slump and the current unemployment rate continues to fluctuate between 8 to 10 percent, but despite our challenges, the 1930s with their unemployment rate at 25 percent and no safety net caused people at that time to fare much worse.
Taking Stock of the Present Situation
The fact that people in the Depression of the 1930s faced harsher times gives little solace for those of us experiencing difficult monetary restrictions under the existing economic conditions. That said, evaluating the state of my current financial status presented the first task to handling expenses.
Assessing the Intake of Earnings and Output of Spending
Income and expenses appear on my bank statement via direct deposits from my employer, fixed bills paid by online banking and the use of a debit card for all other expenses. A Microsoft Excel spreadsheet easily itemized all the expenses. The listing on the spreadsheet revealed the following breakdown as a percent of the total spending:
*Mortgage 40 percent
*Utilities 13 percent
*Car Loan and Car Insurance 15.5 percent
*Gasoline 3 percent
*Telephone 4 percent
*Medical/Dental 3 percent
*Groceries 14 percent
*Magazines 2 percent
*Cable (Television/Computer) 5.3 percent
*Newspaper 0.20 percent
The total spending exceeded my income by 10 percent. Even though the government runs on a deficit budget, real life fails to provide consumers with this option.
Reining in Expenses
The answer to balancing my budget rested with learning to survive by living frugally. The Thrifty Fun website offered many examples of economical living. Fugal living advices distinguishing between needs and wants. A need encompasses an essential service required for your existence. A want represents a wished for item, but something one can live without purchasing the desired entity.
Some definite needs encompassed the mortgage and car expenses; whereas; cable television cost reduction transpired by canceling the premium channels. Utilities fall into a need, but Frugal Living Tips suggested multiple ways of reducing energy requirements for the home. Ways to reduce electricity utilization in the home included: turning off the air-conditioner when not in use, putting computers, printers and television on surge protectors so that the power can be switched off when not in use, switching all light sources to energy-saving bulbs and always washing a full load of clothes in the washing machine.
Altering Spending for Groceries
Frugal Life advises grocery shoppers to follow four basic rules for reducing the cost of purchasing items. First, always take a list of needed items to the grocery store. Second, plan the meals one to two weeks ahead of time and seek out items required to fit the plan. Third, refrain from shopping when hungry. Fourth, using coupons saves about $10 per trip to the grocery store. Of course, knowing where everything in the store and watching for sales also saves time and money.
Balancing my Budget
By reducing the expenses in the area of utilities by 3 percent, the cable television by 1 percent, medical/dental by 1 percent and groceries by 5 percent, the budget balanced out evenly. The budget remains bare bones without any superfluous expenses. Ways to earn extra money represents an avenue to explore in the future to reduce the current restraining financial environment.