21 Plus Tips To Help You Recover From A Personal Financial CrisisThe best place to start on surviving this recession is to look around your home, see what you need, see what you want, and decide between those items.
It is very easy to say I need a new entertainment center, and at that moment jump in the car and go buy it. But, if you are taking the current economic conditions seriously and worrying about what tomorrow might hold in store for us, then waiting may make more sense than impulse buying.
Often, the entertainment center can wait for better times and more secure economic conditions.
It takes real courage to say that you will save the money instead, maybe even putting that money into a saving account that could earn a trickle of interest until you need it far worse than you need it now.
As we look towards the unknown economic environment of tomorrow, it is important to consider that tomorrow could potentially be worse than today. If that were to happen, you will need some savings to fall back on, when that rainy day comes knocking.
That is why starting and sticking to a responsible budget may help you weather the coming economic environment. Please don't get me wrong... I am not saying that worse days are coming... I am generally an optimist, so taking the negative view of tomorrow is not in my DNA. But we never truly know what tomorrow might hold in store for us.
I have seen the good, the bad and the ugly in my personal finances - even during good times. For years, I ran through life, living the good life, buying what I wanted when I wanted it, because I had tens of thousand dollars in my savings account. Then the bad days came rather unexpectedly, and my savings were drained to almost nothing in the matter of only a few months...
Even as I write this today, the good times are returning for me, but my savings have not been recovered to the level they were at just three years ago.
Having recently - in the last few years - seen the drama that can come to one who does not have enough money coming in to cover all of the bills in a timely manner, I am reminded to return to my more conservative roots. And in doing so, I can show you how you can join me in the road to a fat savings account and future good times.
I have been up and I have been down during my life. I was glad to put the bill collectors behind me. And for nearly a decade, I rode the wave of prosperity, never hearing from a single creditor about a late payment. And then when my finances began to bottom, the bill collectors started to call.
I came close to a car repossession and house foreclosue - within two weeks of total financial disaster. And then with my back to the wall, I was finally able to turn the corner and start rebuilding my good name. I don't hear from any bill collectors anymore. Thank goodness.
Stop The Financial Bleeding
The first step to correcting a potential financial disaster is to figure out what you can afford to keep and what you can bear to get rid of. When the bottom fell out for us, we put our second vehicle up for sale. Once we were rid of that gas-guzzling, always breaking-down, newer SUV - I despise Hyundai today for that reason - then we were able to stop the financial bleeding. But we still needed a second vehicle.
So we shopped for a used vehicle that would meet our needs and found one 200 miles away for just $5,000. The van was in good shape, but it had a cosmetic issue that reduced the overall price of the vehicle, by more than $5,000 according to the prices of comparable vehicles with comparable mileage. We could deal with that unsightly dent, so long as the vehicle served its function. We paid our mechanic to travel with us to check out the vehicle, and then we offered the dealer $800 less than the asking price, so that we could pay all cash. The dealer agreed and we took home our new, used Dodge Grand Caravan.
Now, we no longer bleed money to keep two vehicles in the driveway.
We eliminated one car payment, and we managed to get a second vehicle that we could reliably count on to carry us where we need to go.
Set Up A Budget And Stick To It
There are some things in life that cannot be escaped... As the old joke goes, two of those items are death and taxes.
But honestly, there is also a home, water, electricity, telephones, transportation and food.
Figure out how much money you need to have available to pay for each of these items, and then watch the remainder of your money carefully.
Designate how much money you have available for your home, utilities, groceries, transportation, and entertainment in each calendar month. And then make a sincere effort not to exceed the money you have alloted for each item.
Occasionally, you will run into unexpected expenses - like owning a Hyundai. The vehicle was just outside its warranty, and we were forced to spend a whopping $6,000 in back-to-back-to-back-to-back-to-back repairs to keep that silly thing on the road. We blew through $6,000 of our savings in just three months time... And for most of that time, we were restricted to having only our small economy car to serve the needs of our family of five.
Despite what the Hyundai commercials suggest, you could not pay me enough money to ever own another Hyundai!
There I go on another Hyundai rant...
Be sure to set up a portion of your monthly income to put into savings. We would have been up a creek without a paddle if we did not have the savings we needed to keep fixing that piece of crap Hyundai and to buy its replacement for cash money.
Reduce Your Monthly Expenses
This is actually much easier than you would think. Besides not buying a Hyundai, reducing your monthly expenses can be pretty easy and straight-forward.
* Turn out lights when they are not in use.
* Cut those 20-minute showers down to 10-minutes.
* Don't leave the water running when you wash dishes or brush your teeth.
* Reuse bath towels between showers. This will reduce your need to use your washer and dryer, and as my ex-girlfriend used to say, you are supposed to be clean when you get out of the shower anyway.
* Put more clothes into a load of laundry. Once again, by doing so, you are reducing your need to use the washer and dryer as often.
* Clean the lint filters in your clothes dryer between each use, and clear the lint from its exhaust vent once a month. If your clothes dryer is clogged with lint, then it has to work harder to dry your clothes.
* When you replace your clothes dryer, buy the more expensive unit that has a Sensor Drying option on it. This enables you to set your clothes to dry for only as long as is required to get your clothes dry. Why set your dryer to run for 60 minutes, when it may only take 45 minutes to dry your clothes? If you don't have this option on your current clothes dryer, be willing to run your dryer for 30 minutes and then check to see if the clothes are dry before setting it to run additional minutes.
* If your water heater is easy to get to, you can turn off the water heater when you are not using it, and turn it back on thirty minutes before you will need it next.
* Fill the dishwasher completely between each use. In other words, wash more dishes for the same money.
* Don't cook in the oven during summer months. Try not to overwork your air conditioner. A money-saving step that accompany this tip is to wash out your air conditioning unit or central air unit regularly with a water hose. The more dust and bugs that gather in your air conditioning units, the less fresh air your unit gets, and the more power it has to burn to keep your home at a comfortable temperature. Along the same lines, change the filters in your air conditioning system on a regular basis.
* Buy a big deep freeze to keep those items that you can buy in bulk at a nice discount. Just the other day, my wife purchased $108 worth of hamburger for a mere $54 on sale. As a result, we have enough hamburger to last us for a couple months. This would not be possible if we did not have a deep freeze in our home.
* Swap out your curtains during season changes. We keep see-through curtains on the windows during the winter months (or when we rely on heating to keep the house comfortable) to enable more natural light and heat to enter our home, and therefore reduce our heating bills. During the air conditioner season, we keep dark curtains on our windows to block extra light and heat from entering our home. (I know what you are thinking... Brighter colors reflect light and dark absorbs light, but the amount of natural light actually reaching inside our home is the real consideration. Our house is generally ten degrees cooler with dark curtains on the windows during the summer months, instead of the see-through bright curtains.)
* Encourage the kids to play outside, instead of in their rooms.
* Don't overwater the lawn. While water is cheap, it is not that cheap.
* Put solar lights outside to light your yard. We recently purchased two-dozen solar lights to light the sidewalks and driveway outside our home. We ended up getting more light outside at night, and eliminated the need for that big electric-powered spotlight on our front porch. We were able to get the two-dozen solar LED lights for outside for under $50.
* Replace all of your standard light bulbs with the new energy saving spiral light bulbs. Yeah, they are more expensive to purchase up-front, but they provide the same level of light, while using much less electricity. AND the florescent bulbs are said to last for years without replacement. (We can attest to this claim to a point... We have had all florescent lights in our house for the last two years, and we have yet to need to replace a bulb.)
* Ceiling fans help circulate the air in our home during summer and winter - circulating cool air and heat as needed, respectively. Did you know that you can get cheap ceiling fans at Wal-Mart for $20 a piece?
* If you can afford double-pane windows for your home, you will find that they will pay for themselves in very short order by significantly reducing heat loss in the winter and heat gain in the summer.
* Make sure your doors and windows have a good seal to reduce heat loss/gain year around.
* Eat leftovers. Buy in bulk when you can, and cook in bulk when you can - especially during the summer. If you have to cook in the oven, cook a big meal that you can eat from for several days.
* Magic Jack - They are advertising a new telephone line that you can use in connection with your high-speed internet access, called Magic Jack. For $40, you can get the equipment and one year's worth of service. I eliminated an $80 per month AT&T bill, when I chose to go with the Magic Jack program. And for the most part, I am completely satisfied with the service.
When we started to feel a serious financial pinch, we took actions that eventually led to us being able to stabilize and recover our personal finances.
* First, we stopped the money bleeding.
* Next, we set a budget and started sticking firmly to our defined budgetary guidelines.
* Third, we started reducing our overall costs of living, utilizing 20 of the 21 money-saving tips shown in the previous section. The only thing we did not do was to replace the double-pane windows that have been broken by our kids over the years. All told, we were able to reduce our monthly expenses by as much as 25%, putting us on more solid ground to be able to recover from our financial woes.
* Fourth, we started putting our extra money into a saving account. Now instead of struggling from monthly cutoff notice to monthly cutoff notice, we have paid our bills down to current - with six-week's of living expenses in the bank. We are still working to get back to the one-year's worth of living expenses in the bank as we had three years ago, and we will get there in time.
But the good news is that we are no longer worrying about whether we will be able to keep our house and cars. We are set up to recover from our financial woes, and with discipline, you also will be able to do as we have done.