In The News

Staying Healthy: financial crunch

One couple I know hit a financial crisis recently. The husband lost his job when the company went bankrupt. His wife applied for a better paying position in her field, but did not get the job. The husband had to take work paying little more than half of what he was previously earning. Now they are wondering how they will pay their mortgage and keep their house. They are cutting back on any extra spending and calling their banks in hopes to reduce payments.

Another couple lost income as work slowed down. They had to use credit cards to purchase gas and groceries for several months. They cancelled their plans to fly home for Christmas and cut back on gift buying. Although worked picked up again, they now have more debt to pay, and realize that any slump ahead will throw them into financial problems.

Not everyone is dealing with such financial difficulties, but most people are wondering what lies ahead.

It is especially worrisome for those who live paycheck to paycheck. Others may have a small cushion of savings, but want to keep it that way. Even those who are well set are keeping a tighter clutch on their purse strings.

With all the talk about the “downturn” in the economy, many people are looking for ways to cut back on their spending. Whether feeling the financial crunch already or concerned one is on its way, they’re starting to take a closer look at where their money is going.

If you’re concerned about what may lie ahead, or just want to create a little cushion, here are some ways to cut back on spending and save more.

Limit holiday spending

Many people feel pressured to give everyone they know a Christmas gift, even the mail carrier and the pet groomer. This can put you in debt and have you paying off gifts well past New Year’s. Consider cutting back on gift buying. For some people you know, a card with a heartfelt note may be appropriate. Homemade baked goods, or “certificates” for your services (like washing the car or cooking for a day) may be perfect for others. For those you want to buy the perfect gift for, buy that one great gift then don’t feel like you have to get a bunch of peripheral stuff.

Look for sales

Whatever you’re shopping for, look for sales, coupons, specials, rebates and clearance items. End of the season sales offer great bargains. For large ticket items, like appliances, there may be discontinued or floor models at reduced prices. Weekly grocery items can be saved on by clipping coupons, looking for in-store specials, and buy-one-get-one free deals. Many stores offer a club card for additional savings.

Save on food costs

A family of four can eat at home — chicken tenders, baked potatoes, steamed broccoli — for about $10. Take that same family out for dinner and it’ll cost at least three times as much. Eating at home more often and taking food along will be less expensive than always buying out. Snack foods, soft drinks, coffee and candy are all cheaper at the grocery store than at the convenience store. Stock up at home, and take snacks and drinks along on the road to avoid paying for overpriced items. When appropriate, buy generic items and foods that can be made from scratch instead of prepared items (such as bulk oatmeal compared to boxed single-serve packets).

Trim back utility costs

Turn the thermostat down and put on a sweatshirt! Especially at night or when away, turn the heat down. Follow the golden rules of turning off lights, televisions, computers, etc., when not in use. Hang clothes up to dry when possible. As your light bulbs burn out, replace them with low-energy compact fluorescent bulbs (CFLs), which burn longer and for less energy. Check weather seals on doors and windows to be sure cold air isn’t seeping in and warm air leaking out. If necessary, add insulation to attics and crawl spaces.

Enjoy cheap entertainment

There are great things to do that cost little or no money. Libraries offer books, DVDs and videos, and internet access. Local parks often have walking trails, playgrounds, basketball and tennis courts, and maybe even fishing. State parks or preservations offer nature and wildlife programs, hiking trails, and picnic or camping groves. Roller skating rinks and bowling alleys may offer family rates on certain days and times. Hometown high schools and churches offer plays and concerts. The mall can be a fun place to walk through window shopping, spending only a couple of bucks on a soft pretzel and lemonade. Then there are the old standby games like Monopoly and Dominoes for a cold winter’s night.

Limit luxuries

There are things we need for daily living and some things we just want. A lot of life’s little luxuries end up costing us more than we realize. Buying coffee and a breakfast sandwich every morning could end up costing $20 for the week, and over $1000 a year. Playing arcade games, buying music CDs, or getting a manicure on a regular basis adds up. It’s the little things that we don’t think about — a couple dollars here or there — that are like a hole in the purse.

Avoid impulse buying

It’s a good idea to “sleep on it” when making a large purchase. Give yourself time and distance to think it over. Even when going shopping for clothes or groceries, take a list and only the money needed for those items. Get down to business, find what you need and make your purchases. Meandering around could tempt you to buy a new pair of shoes (when you have 20) or several bottles of gourmet sauces (that’ll sit in your cupboard until they go out of date).

Telephones, TV and Internet

Always keep your eye out for better, less expensive plans. Compare long distance service between your landline and cell phone. Track your minutes to see what plan you really need. Consider getting a lower cable package if there are channels you never watch. Sometimes bundling phone, cable and internet from the same provider can be a cost savings. Check your plans to be sure you are utilizing all your features and drop what you don’t need.

Lower payments

If money is tight, it may pay to refinance your home or ask your mortgage company for a lower monthly payment. If you have high interest credit cards, try to pay them off as quickly as possible, or transfer the balance to a lower interest card if that’s an option. For insurance, check your policy with other providers. You may be able to get the same coverage through a different company at a lower cost. Much of this can be investigated online through insurance and refinance quotes.

Do it yourself

Anything you can do, do it yourself. Hiring a professional will cost a bundle in labor. Doing it yourself will cost you the time and materials. Paint your own kitchen, clean out your gutters, change the oil in your car, dig up the dead bushes, or refinish the wood floor in the living room. There are detailed instructions online for all kinds of fix it projects, plus workshops can be found at some home improvement stores. If you don’t know how to do something, call on family or friends to help. Chances are someone in your circle of family and friends will have the know-how.

Buy used

Don’t be afraid to check out the Good Will or Salvation Army stores. There is often name-brand, quality, good-conditioned clothing for peanuts. Check the classified ads for items you need that someone might be trying to make a quick sale on — like a moving sale where you can pick up a nearly new washer for half its original cost. Visit the used furniture stores for solid wood pieces that might have a few small dings. Check the used car lots for warranted vehicles to avoid the fast depreciation of new cars.

Vacation at home

Much of the money spent during vacations is spent on hotels and food. If you want to take some time off, but have a tight budget, consider sleeping at home. Take day trips to fun attractions that are within driving distance. Instead of spending $50-$100 each night on lodging, you’ll spend nothing and get to sleep in your own bed at night. To save even more, pack a lunch, drinks and snacks in a cooler to take with you. You don’t have to worry about packing the right clothes or running out of underwear.

Of course, the old adage, “Live within your means,” still holds true. No matter how many corners are cut, if the spending still exceeds the earnings, no financial ground is gained.

Wishing you a prosperous and happy Christmas and New Year!