Tips for Saving Money During a Recession

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No individual government leader can pull our country, or any other country, out of the recession the world is in. It will take guidance, planning, and cooperation amongst a broad coalition of people and that includes us.

Remember that old joke, “a recession is when your neighbor losses their job and a depression when you lose yours”. If you are not taking action to stay employed where you currently are or to be employed somewhere else you are in a dangerous delusional state of mind.

The first step in recession resistance is curtailing spending and tracking your money better.  Here are some easy, and painless steps that you can take.

Always be aware of and keep track of your where your money goes. Do this no matter what the economic conditions are. If you need some financial software the most popular is Quicken.  My recommendation is that you make a decision to use software if you don’t have a daily system in place to add up your financial outlay, but do try to save time by tracking your expenses on a daily basis.  For example, if you carry a Day Planner, make notes in it each day when you spend money. You will be surprised how much you spend at the end of the day that you weren’t even aware of. If you purchase a bus ticket, write it down. Gas for your car? Write it down? Coffee and a donut, a soft drink from a vending machine, breakfast, lunch? You get the idea. It can add up quickly. Do this for a couple of weeks and you will have a very clear idea of just where you can adjust your spending habits to get more use out of your money.

Shop around for a sound bank paying a high interest rate.  There is no sense in using a bank account that is paying dramatically lower than another that you can use. Don’t use a checking account that charges a monthly fee. That is a ridiculous waste of your money.  Go to www.bankrate.com and do a little research on what bank is best for your checking and savings accounts.

Call your credit card company and ask for a lower rate. If you owe $10,000 and reduce your rate by 3% could save well over $300 or more during the year. A lot of people never think to take this simple step, but it can be very effective. Call the phone number on the back of your card and push the necessary buttons required that get you to an actual human being.  Ask to speak to a supervisor as most first level people don’t have the authority to make any changes to your account. Once you have this person on the phone, request a rate reduction. Oftentimes they will comply with this request, but if they balk, tell them that you are considering transferring your balance to another card offering a 0% interest rate. If this doesn’t move them, suggest that you are having difficulty making the payment, which will often convince them that they need to keep you in a position where you can keep paying them. If these tactics don’t work, I suggest that you thank them politely, hang up and make it your mission in life to pay that card off and destroy it. This is not a company that you should be doing business with. If this is a card that you have had for a long time, it is probably not a good idea to close the account as it is always good to have long standing open accounts in your credit history, but there is nothing that says you have to give them any more business.

We all require entertainment now and then. Head for your local library that is supported with your tax dollars and check out some books and a great movie or two. If you are a serious movie buff, Netflix is a great alternative to heading for the local theatre. The movies are delivered to your door, you can watch then when you want, pop your own popcorn and avoid the ever increasing poorly mannered people that seem to populate movie theatres with their cell phones. By using a movie service of your choice to watch movies that you haven’t seen or possibly won’t live you can save money that is best used elsewhere.

Use power efficient appliances when possible in your home.  Even a Compact Fluorescent Light Bulb (CFL) saves noticeable amount of electricity, particularly if you have a large house and a family.  Visit http://www.epa.gov/ and the US Department of Energy for additional information on this topic.

Do you really need to spend $10 or more daily at a high-end coffee place?  Of course you don’t!  By the time add these costs up in your Day Planner at the end of the day you are going to find that you are spending a LOT of money that really could be utilized to pay bills with, buy groceries with, or even put into a savings account. If you find that you are visiting your local coffee bar more than once a day, five days a week, consider cutting back to once or twice a week as a treat to yourself for a job well done.

Eat at home!  If you don’t particularly like to cook, or aren’t that motivated in the kitchen, most grocery stores stock wholesome prepared meals these days. If there is a Whole Foods in your area, take a look around to see where you can purchase a combination of both prepared foods and ingredients for creating your own meals. I buy in bulk or large amounts where it makes sense.  For example I keep a lot of dried beans on hand, prepare food then I freeze a portion for later, also I keep a small amount of frozen raw goods such as fish in the freezer. Consider the purchase of a slow cooker. You will come home to very tasty and nutritious meals at the end of the day that cost you a mere fraction of what it would cost to eat in a restaurant. Healthier too! If you eat out two or three times a week in a high cost area such as New York City that could easily be $150 for the week for one person and this is nothing fancy.  Cutting back on two restaurant meals can give you an immediate savings of $50 monthly or $100 monthly equaling $1200 that can go into an emergency savings account.

Save on vacations by going on a church or charitable mission.  A good deal of it is tax deductible, you do something good for someone else, and you see a new or exotic locale.  I saw Africa this way.

Notice none of these steps are painful.  A slight adjustment in behavior and as much as several thousand dollars re appears in your income stream.  Spend the next 12 months taking these steps and you will see the difference.

Next issue: Tips for Saving Money During a Recession II – “Housing, Insurance and Witholding”

THJ & Associates, LLC 2009