10 Frugal Steps To Help You Survive A Tough Economy

by Jacques Sprenger on 2008-10-0232

Here are some frugal steps you can take to survive a tough financial period.

There is nothing that ordinary citizens like you and I can do to solve the mess on Wall Street. Calling your congressperson every day won’t change his/her vote, because they have to follow the party line in most cases. The only weapon we have is to vote on election day for changes at the House and Senate. The presidential candidates haven’t shown much to convince us; the choice is really to vote for the less “bad” of the two.

Despite all this talk of financial bailouts and government intervention, we regular folk need to fend for ourselves in the midst of the chaos. We may be mere spectators to what goes on in the big, wide world of finance, while some of us have already become unsuspecting casualties to the sweeping economic events of the past couple of years, but we don’t have to feel so helpless (even though it may seem that way). I’d like to investigate the things we can do to limit the negative effects of this difficult economy on our financial status and well-being.

frugal steps to survive a tough economy

How Can We Prepare For A Tough Economy?

When it comes to your family, it’s time to circle the wagons and consider extreme measures to survive the economic crisis. You should act as if you were about to lose your job. Prepare for the possibility just in case it happens, because some banks are failing and the others are afraid to loan money to small businesses. If large companies are cutting their workforce by the thousands, imagine how difficult it is for small businesses to survive.

Don’t Emulate The Joneses

I see some of my neighbors still buying expensive and gas consuming cars and trucks, probably because they have stellar credit. This is not the time to buy anything costly, be it a car or a house, unless you are overflowing with excess cash. Even if you enjoy a good financial position, with little debt, things could turn around in a hurry. I know, because I went through it 20 years ago. I was laid off suddenly from a software company with 140 employees. I still had to come up with the mortgage and the car payments and every other expense a family has to live with.

Frugal Steps To Survive This Economic Downtrend

How determined are you to make some frugal choices? Some decisions may not be too easy, but others may be. The financial crisis hasn’t filtered down to the average consumer, yet. By the time things get back to normal, a lot of middle class people will have suffered job losses, depreciating 401Ks, and heartbreaking decisions. It pays to prepare for an emergency before it actually hits you, so I would recommend the following steps to any family that already struggles with their monthly budget:

#1 If you can, try to live with only one paycheck (if both spouses are working, of course), for at least one year and put the rest in protected financial instruments.

#2 If you have two or more cars in the household, how about selling at least one? Can you get by with fewer vehicles? Not to sound radical, but you may consider unloading your car now (especially if it’s a gas guzzler), while people still have the cash to buy your SUV or truck at reasonable prices. You’ll save on gas if you keep the car that uses the least amount of fuel.

#3 Wherever possible, use public transportation as it’s still a lot cheaper than driving. Or turn to alternative forms of transportfuel efficient cars, anyone? Another option is to walk (gasp) or use a bicycle. Hey, it’s good for our health!

#4 We have already talked about saving at the supermarket in previous articles: try these grocery shopping tips. Make a list and don’t deviate. You’ll save a bundle and you’ll also help your children’s health by no longer buying junk food and sweets.

#5 Concentrate on necessary expenses and make a detailed budget every month.

#6 Get rid of the credit cards as soon as you pay them off. The temptation to overspend is greatest for those who carry all that fancy plastic in their pockets.

#7 Gather the family and explain the situation to the kids. You’d be surprised how quickly they’ll rally around you. Make it a team effort to conserve your finances.

#8 This may come as a shocker for many young couples: but would you consider waiting to have a new baby for a couple of years? Aside from not spending many sleepless nights, you’ll be delaying a lot of expenses. My parents had only one child, me, at the end of the Great Depression. They waited 10 years to have my sister (and I wanted to be the spoiled one). This decision may not be for everyone, but it’s a practical one to make at this time.

#9 Cancel subscriptions to magazines and newspapers. It may not be much, but it counts — much like many other smaller expenses that add up, especially over the longer term. Besides, you can get the news for free over the internet. You won’t have to look far for extra savings if you realize how much money drains can add up over a decade!

#10 Check your phone bill’s extra features and eliminate them. Your extra phone lines: are they really necessary? Could you use a better, more affordable phone plan? Same goes with your cable or Direct TV bills.

Bottom-line: Be smart and be prepared. There are many more places we can probably squeeze more dollars from, if we tried hard enough — utility bills, big ticket purchases, holiday shopping. If things go back to normal quickly, unlikely as it may be, we can enjoy all our extra savings. Otherwise, our frugal habits can help us weather any financial crisis with some measure of comfort.

 
Contributing Writer: Jacques Sprenger is a former college professor in psychology and English, a counselor, and now a teacher for challenged students. Jacques will be joining me at The Digerati Life to offer his views on personal finance and self-development, which are topics that he is passionate about.

Copyright © 2008 The Digerati Life. All Rights Reserved.

{ 23 comments… read them below or add one }

Ken Deboy October 2, 2008 at 12:57 pm

Actually, if one has a secure job, it could be an excellent time to purchase a house or two as rental properties.

Cheers,
Ken

Luke @ Money & Fitness October 2, 2008 at 2:14 pm

Great article and always interesting.

I have to ask. Do you use public transportation?

I am a big fan of this one, no matter your financial situation: “#5 Concentrate on necessary expenses and make a detailed budget every month.”

James October 2, 2008 at 3:45 pm

very nice advice, during tough times it surely would be a good decision to cut down on ‘excesses’ like magazine subscriptions, eating out at expensive restaurants, buying expensive clothes etc…

Silicon Valley Blogger October 2, 2008 at 3:57 pm

@Luke,

Actually, I’m not very fond of public transportation but Jacques (the author of the article) may be. :) Instead, I try to cut down (heavily) on travel. I don’t commute or leave the house as much as I used to. We don’t do much travel at all and instead, go to local parks and nearby areas for leisure. It has worked very well for us so far and we have cut down quite a bit on gas consumption!

John October 2, 2008 at 3:59 pm

Great article and tip #5 as the above poster mentioned and tip #7 is key. If everybody in the family is on the same page that makes it much easier and a good learning experience for the kids later in life.

John October 2, 2008 at 4:20 pm

Thanks for all the tips. I think #5, the budget, is mopst important. For those who still need help, I found this site http://www.needhelppayingbills.com which gave some ways and programs that help save bills, both from the gov’t and utility companies themselves. Anyone else have any good programs?

Silicon Valley Blogger October 2, 2008 at 5:08 pm

@John,

Thanks so much for the tip! I’d be interested to know if there are more resources out there that can help with bill pay.

OStanley October 2, 2008 at 6:47 pm

The recession is real and we have to adjust to it until it blows over. It isn’t about spending less but spending smarter.

The Five Minute Mentor October 3, 2008 at 8:06 am

Great advice! You covered some topics that are touchy for most to think about….very practical and timely.

Sam@Austin Real Estate October 3, 2008 at 9:34 am

Put off having a baby? I wouldn’t have thought of that, but it makes a lot of sense. It is amazing how much money you spend when becoming a new parent for the first time (or when you become a parent again!).

Jack October 3, 2008 at 3:12 pm

Another one that I am seriously considering is learning to grow my own food. My wife got this book about growing a “container garden” which is essentially a planter that you grow food in. With our limited space it seems like it might be a good idea for us. Will it save us money? That is question that I am willing to answer by giving it a go – who knows, I may even like it!

Curious Cat Investing Blog October 4, 2008 at 2:38 pm

Good advice though I am not sure about number 8. Other than that one I also think those are always good ideas. I think far too often people think doing sensible stuff needs some excuse – like a bad economy.
A couple of those might be a bit extreme to practice full time (like living on just one paycheck) but that idea of reducing spending and saving more is good most of the time.

wordwych October 5, 2008 at 8:30 am

Good tips, but I’m not sure why canceling magazine subscriptions would be frugal unless you’re paying on an installment plan. I think most people pay a yearly subscription price, so canceling something you’ve already paid for isn’t likely to bring you much $$ in the way of a refund. I’d simply opt not to renew at the end of the subscription period. I wouldn’t cancel something I’d already paid for.

Silicon Valley Blogger October 5, 2008 at 9:12 am

@wordwych,

Agreed. I think the terminology was a bit off here and we really do mean “not to renew” existing subscriptions. However, there are companies that may refund your money if you ask them to, upon canceling their subscriptions in mid term.

Escape Somewhere October 5, 2008 at 12:08 pm

For us we have a small business. During the current economic climate we have been going over expenses with a fine toothed comb and looking for what we should take out.

To be honest its something we should have done before but the current situation really forces us to do that more. In ways its positive because it really forces us to be smarter about spending.

Writer's Coin October 14, 2008 at 3:36 pm

Living on one paycheck seems kind of a big deal to jot down as a bullet, even it is #1. That’s one of those “if you can” deals that most young people really can’t do.

Noticias Automotivas October 15, 2008 at 8:47 am

very nice tips there, thank you.

Paula Ford November 10, 2008 at 12:19 pm

Absolutely great blog!

The thing I like about this blog is what I call “the experience factor.” So many people are not prepared because they haven’t been impacted by large economic issues in the past like this downturn looks to be.

I started turning my personal savings situation around when I read stickyasset.com. I started with the ten things you can do to survive any financial crisis and I have not looked back.

It’s smart to seek out advice and thoughts on these things, and I am glad your blog is here!

Thank you.

Paula

Jacques Sprenger November 12, 2008 at 5:11 pm

Paula makes a great point; young people who have led a life of “contentment” have no experience with hardship. They are so optimistic that they may fail to prepare for a rainy day (year?. Did we listen to our parents, those who went through the Great Depression? Naw, it couldn’t happen again, could it?

Karen December 29, 2008 at 12:44 pm

Yes, even for those of us in our fifties, we have never experienced something like this. Some downturns, but never this deep. We heard our parents speak of the Depression and their fear that it could happen again. But we thought, “Mom and Dad, you worry too much. Now there’s much more regulation. It won’t happen again.”

Loyd Ford January 16, 2009 at 5:40 pm

Actually, the writer is correct. Harder times than Americans are used to are here or on the horizon. It has not filtered down to most yet, but you can easily see the thousands and thousands of job losses every day.

You must develop a very specific plan of your own – based on your situation – to survive what is coming. If you are lucky enough to have two incomes, work to live on only one and put the other away.

Cut all credit spending and work to pay off any credit cards (highest interest rate first). Focus on building the new standard for emergency savings – 15 to 18 months of expenses.

Do you want the other secrets – the ones you don’t know – for surviving this financial crisis? Check them out stickyasset.com

Thank you.

Loyd Ford

Pete January 21, 2009 at 11:04 pm

Companies know how to tempt people into parting with their money, and often for things the person doesn’t even really need. In buying things we don’t really need, we spend money needlessly. This can wreak havoc on our budget. There are ways to fight the temptation and not spend money.

But here’s the thing — building credit has become an essential part of financial success that most of us as consumers fail to realize. But that would entail having to borrow money and perhaps spending it.

With the exception of some lenders who don’t require a credit check when obtaining their services, most creditors report all open accounts, balances, late payments and so forth to the three main national credit bureaus. These credit bureaus determine a credit score for each consumer based upon their own mathematical algorithm which creditors look at, before awarding or denying you credit. Most people don’t realize just how important good credit is these days; actually, everything from car insurance, to personal employment, takes into account your credit score.

traian April 12, 2009 at 11:34 am

The crisis is hard on all of us… it is really hard to tackle it.. i bought this book and it really helped me understand the crisis and how to deal with it http://www.how-to-survive-the-crisis.com

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