DW and I re-evaluated our budget. We needed to lose weight and saved money by not going out to eat so much. We cut back on entertainment (other than here!). We used to go away nearly every weekend and cut that back as well. Basically we looked at what we could cut now and diverted those savings into our investments and other cash savings. And we increased our 401(k) as now is a great time to buy.
We also made a decision to increase our income. We didn't want to put all of our eggs (a job) in one basket. All it takes is a crack in that egg (job loss, outsourcing, illness, etc) to lead to financial ruin.
All the while we had prepared for the "what if" scenario. We never wanted to be placed in a situation where we were dependent upon others. We had made changes over the past several years to prepare what we are in now.
1. I weatherized our entire apartment. Our heating bills were getting higher each month so I caulked some cracks, winterized the windows, and weatherstripped the doors. Then I put an extra fleece blanket under the fitted sheet on the beds, got a flannel top sheet and then the comforter. Thermal underwear this year! Anything not to raise the heat.
2. I also realized that when I cooked I tended to fill the dinner plate and we always ended up with uneaten food that got thrown out, or stuck in the fridge then thrown out. So I got rid of the dinner plates and substituted them with salad plates. Got rid of our huge pots and frying pans and kept the smaller ones. Now I don't over cook, we don't over eat and I don't overspend at the supermarket. I don't know if it's psychological but my grocery bill went down and my fiance lost about 10lbs.
3. I went over my entire checking account statement. I got rid of things that were auto billed like online magazine subscriptions. I found a phone bill error of about $500 for a number I ported but was still being billed for the past 9 months. I think I wiped out about $1000 of unecessary stuff. I did the same with our credit cards and put some of them away.
4. I set up two savings accounts and one 12 month CD. One of the savings accounts is an auto deposit from our checking and we forwent the ATM card so we won't be tempted to make a withdrawl.
5. We started the toy storage thing with our kids. We take half the toys and put them in storage. After 6 months we'll rotate them. The TV is now on a timer where they only watch it for 4 hours max per day. After that the kids have to find something else to do. My 11 yr old daughter suddenly found an interest in books. And our two year old is finding an interest in pretend play. Im guessing we are saving some energy with the TV and computer not running 24 hours a day.
1. Continuing to invest in 401K despite the doomsday predictions. I remember reading in high school that the people who came out on top after the Great Depression were the people who just ignored the chaos and continued their stable investing into an unstable market. THe pay-off was 20 years down the road, which is our timetable anyway.
2. Living w/in 10 mi radius of our offices.. prior home was 30-40 miles each way for work, for both of us. We're now 8.5 and 4.8 miles away, respectively. Filling up each car every 2.5 weeks, instead of every week.
3. Grilling out instead of eating out. Bought a charcoal grill for $170. It will pay for itself in the first three cookouts, since eating out for a family of 4 usually runs $70. And I hate cooking, so we ate out a lot. But DH LOVES to grill.. even in winter.. don't ask..
4. Consignment shops.. I hardly ever buy new. Ann Taylor, Banana Republic, Express -- my entire work wardrobe cost only $3-$8 each, from consignment & second-hand stores. I am a labelwh@re, but can't afford to be at full-price! Ditto for my kids -- Gap, Guess, Diesel, Limited Too, all from Once Upon A Child.
5. Getting rid of all subscriptions.. classmates.com, playhousedisney, etc.. who really needs those? The kids can play online without a subscription anyway. Saving about $40/mo there.
The things we WON'T cut back on:
Renter's insurance, credit card insurance, auto payment insurance... anything that could come back and help us out in an emergency, we are NOT waiving.
No changes. I try to only buy what I need. Even before all the bad news, I could drive myself and DW nuts thinking and overthinking a small purchase.
Case in point. Bought a wheelbarrow last year that I needed for work in the yard. One came with the house I bought last September, but the handles were housing a family of termites and the metal was rustier than a PG&E gas turbine without chromium six. The rust was liveable, but I rationalized I could fashion a set of handles from scrap 2x4s, which also came with the house. But, once I took it apart, I woulda had to spring for carriage bolts that woulda been close to $10 for hardware alone. Tire was flat and mighta needed an inner tube, so I spurged and bought a brand new wheelbarrow. For around $35 at HomeDepot.
I've tried to do yard sales, but the season is pretty well at it's end. Besides, I never seem to find what I need. Same thing at consignment shops, both for me and the kids. DW won't shop at one. Her Majesty is above that.
Only clothes purchase I might need for the foreseeable future is a belt, socks and, only if the work situation were to warrant it, a suit or two. Wife doesn't live to shop, but she doesn't seem to hunt for bargains all that much. Although she's a full figured gal who can't buy just anything anywhere. Fashion Bug Plus, Avenue, Lane Bryant, et al. are her usual source. Kids clothes, we take full advantage of sales and deals at Children's Place.
I likely won't buy or sell a car, unless the motor seizes on my Saturn, in the next 1-2 years. Once the Chevy Volt, CityZENN, Chrysler EV, Ford Escape hybrid plugin, and a few others hit the market, then I'll start considering a trade.
I won't buy another house, unless my bookie calls because PigVomit wins the 4th race today. If a windfall does come my way, now is the time to invest in an investment property, rental or flip, and/or the stock market.
Coworker of mine is the voice of despair, gloom and doom. He's also a Ron Paul supporter, still, and I think the two conditions might be related. He was querying me about the bailout package a week or so ago, and I finally told him there ain't a lot I can do about it, and fretting over it making myself and others miserable ain't gonna solve nuttin'. He asked whether he made me miserable, and I honestly said no that I found him interesting. But I added that I knew others in the office weren't very thrilled with his constant despair and that he may be on thin ice with management. Also not made up. He has perhaps taken it to heart, based on his behavior since. So, perhaps, for the crisis, I'm counseling others about their employment situation.
I'm doing the same thing I've always done...whether a "financial crisi" or not...in terms of cash flow. Watch the spending, know where the money goes, eliminate the things that are not needed or not "value-added". By doing this, we have a surplus of cash in the bank, and our budget and spending habits are not out of control.
Credit cards are paid in full at the end of every month (have been for 20 years!). No car payments, no revolving store account payments...only a home mortgage (about 55% LTV) and rental property debt (see below). When we need to buy something, we research, budget the purchase, and then try to buy it for less than full price (i.e., on sale!!).
I'm still buying stocks through my 401-k (although I rebalanced some of my assets prior to the big drop). I'm also buying houses and holding them (everything's ON SALE!!!), and they cash-flow positively as well (rent is about 2:1 over P&I payments, which leaves plenty of room for management, maintenance, and vacancy, plus "extra cash").
Here's the message: Manage your cash flow during good and bad times, don't live on credit (i.e., spending more than you make), and don't go into "bad debt" to provide lifestyle (my rental houses are "good debt" - they make more money than I spend on them).
BTW - my credit score is 782. I keep regular track of it through this great service you guys provide!
1. Got a second full time job. This provides many benefits -
a. more pay;
b. no time to spend money
c. if I lose one job I have the other to fall back on
d. a second matching contribution to max out from my employer
e. an increased social network
f. an increased chance of oppurtunities
2. DOUBLED my retirement investments into a blend of 'high risk' funds. 30% small cap, 30% large cap, and 40% international. I went from 6% of my yearly salary to 12% and plan to raise it to 15% come mid Janurary. I seem to be on of the few that i looking at the markets right now thinkg 'cool! 30% off sale!' (Note: I've got 30-45 years to let the markets rebound - I don't think this is a good idea for anyone that is within 10 yrs of retirement)
3. Started Coupon Shopping and signing up for Free Samples
4. Walk to work and or the store more often
5. Hit the grocery stores for free samples (hello free meal!)
5. NETFLIXS! If I go to the store and rent movies it will cost me 15.00 for 3; instead I pay Netflix 15 bucks a month and watch an average of 24 movies in a month. Which also means I don't feel the need for Cable/Dish TV (subtrack 60-100 dollars from your monthly budget).
6. Invested in my Financle Education and subscribed to the Wall Street Journal
Instead of seeing an econmic crisis I feel like I'm looking at an econmic oppurtunity for my future.
I adjusted my 401K allocations about 9 months ago (only slightly more conservative) and don't intend to overreact to the flurry of activity in the past 2 months. I have 15 years before it matters so I just need to hang in there.
My expenses are already under control so my spending habits remain the same. I watch all of the recent activity with a somewhat detached mindest.