Personal Finance: You have a paycut, so how do you balance your budget

Posted by Drizzt
May 30, 2009
Image representing New York Times as depicted ...
Image via CrunchBase

Folks tuning in here long enough would know that i am an avid reader of New York Times and since mid of 2007 they have been running a series on how people are coping with recession.

They regularly revisit these families and couples to see how they are coping.

In Still Working but making do with less, the Ferrells have essentially cut out on luxuries and choosing to go basic on things they used to be lax on. In the case of the Ferrells, Father Ferrell still has a job in an electronics company and Ma Ferrell took a 10% pay cut as a customer service technician.

These kind of pay cut would mean that if you are managing every thing down to a single cents, you have to cut somewhere. In the case of this family its $450 less. There comes the decision.

What the parents did was to go through all their expenses, debts that are mandatory, things such as mortgage,utilities and car insurance that you definately have to pay, consolidate them. This is then deducted from your total disposable income.

Some of the stuff they have done:

  1. Cut back on children’s ballet lessons
  2. Cut back on vaccination for pets
  3. Hair cuts have become a luxury
  4. When grocery shopping, find out how much they have currently to spend on. When shopping use a calculator to keep this in check.
  5. Map out what the dinner menus will be early in advance and purchase to fulfill that. it saves them $200 that way.
  6. Not fix the car air-conditioning even though it is spoilt, and tries to drive on cool days.

If you are in the same situation, i hope you can do what this family have done. its not the most pretty balancing act but at least you are still able to maintain a decent lifestyle and keeping your spirits up.

I sometimes feel that there is only this much that you can cut down on, that is why it is important to plan till the last available cent and always know what are luxury and what arre necessary.

I went through such an exercise when i have to think about a long term psorasis treatment that i am attempting. it cost money like buying a car but that also means a chance to be rid of it in the future. So i need to give up something. i will blog more about this next time.

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Comments
Comment by Business Finance blog on June 10, 2009 @ 10:19 am

Great post!! I just have to copy it :)

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