Spending Habits and Easy Money

Every spendthrift American is prone to bad spending habits. These habits are fanned even more due to quick availability of loans and easy access to credit cards which eventually results in neck deep debt. Debt is a monstrous hole that is engulfing the young generation into its clutches.

Are you a reckless spender? Is this habit leaving you at the mercy of debts? Instead of spending sleepless nights, consider checking your spending habits. It’s not a very difficult task to accomplish; rather it’s about being a little more disciplined with your expenses.

Here are four tips to kick start your debt reducing plan:

Prepare a Monthly Budget

If you choose to cut down on your expenses, creating a monthly budget is a must. It’ll help you keep a track of your expenses. Just be honest and disciplined with the budget. This will not only improve your money management skills, but will also save you a considerable amount.

Avoid Using Credit Cards

Since it’s easy to overspend with credit cards, use them only when it’s absolutely necessary. Use your debit card or cash instead for all your purchases.

Do Not Compare Your Finances With Others

Your friends and neighbors might afford certain luxuries that you cannot. Do not be disheartened. It is not a very wise idea to follow the rampant spending spree of others. You are not aware whether they are already debt ridden or not. They may have an alternative source of income to afford the extravagance.

Recreation is needed in the mundane everyday life; however savings is also of utmost importance. It is unreasonable to cut out all entertainment, just make sure to spend within the stipulated budget.

Search For Alternatives For Regular Expenses

Do you have any idea how much you spend on snacks, coffee and cigarettes monthly? Smoking is especially addictive. It not only affects your health but also burns a hole in your pocket in terms of expenses. Try to cut down on such expenses and you will be able to increase your savings.

Switching off the lights, AC, heater when not needed, can also save you a lot of money every month.

All you need to do is develop a logical mindset towards your expenses. Refrain from taking audacious financial decisions and do not indulge in wild spending sprees. Think smart and think economically.

Seven Productive Years With My Employer

I was working from home, something I pretty much never did. A few minutes past 9:00 am, the phone rang. It was my director. My immediate supervisor was on the line as well.

 “This can’t be good,” was the first thought to cross my mind. “Layoffs. And this time my number has come up,” the thought continued.

 “Hello, Chris. This is Jared. I have Khahn in my office as well. I don’t like to have to do this over the phone, but we are having another round of layoffs. This has nothing to do with your performance. You understand. Upper management says we have to make some more cuts.”

The company had already been through 9 rounds. I guess that would make this one about number 10.

Hunkering Down

My wife heard my end of the call. She immediately knew what was going on. Later that day, we sat down and began figuring out what we would need to do to survive the coming months. Here’s what we came up with:

1. We paid off the car. We did WHAT, you ask? Yup, that’s right, we paid off the car. I know, it seems like an odd thing to do after just losing a job. The company gave us some money after laying me off. And a little extra for being old :). I guess 40 is old now days? Anyway, I didn’t ask any questions. Our line of reasoning was pretty simple. We needed to reduce our monthly expenses. No car payment equated to a monthly savings of $523.
2. We reduced our monthly mortgage payment. How could we do that, you wonder? Well, I had foreseen the possibility of a pink slip a year before it showed up. So I refinanced my mortgage well in advance. We got a 5 year mortgage, amortized over 30 years from Ing Direct. (I wouldn’t recommend this for most situations.) We were making large extra payments on it, with the goal of having it paid off in 4 years. This also allowed us to stop making the extra payments in the event of a job loss. Phewww!
3. No eating out??? We were already living pretty frugally. The layoff added a little to the frugality. No eating out. Clothes purchases were drastically reduced or even eliminated. No movie theatre tickets. We did, however, rent a few movies from Red Box. To really sum it, we shrunk the monthly budget where ever we could.
4. No job translates to less expense. And less expense is a good thing when you don’t have a job. My monthly vehicle gas bill dropped from about $175 a month to under $60 a month. And, even though my wife usually made me a lunch to bring to work, I was able to eliminate the couple times a week I ate out.
5. Could I forget unemployment insurance? Nope, of course not. Even though we were able to drastically slash our budget with the steps above, unemployment helped out in a big way. We received $630 a week.

Unemployment Ended Up Being Enjoyable

I understand not everybody who goes through unemployment will come out the other end in the same way I did. We were able to live on 65% less than what I was making while employed, all while not touching our savings. Yes, we were blessed financially.

And being home for most days, I was able to get a lot of things done around the house and on some web sites I was building. Best of all, I was home so much that my one-year-old daughter was able to connect with me. As you know, infants generally connect with their mothers first and it isn’t until years down the road that the father-connection is made. Unemployment brought that connection around much sooner than otherwise would’ve happened. Awesome! Now my daughter asks my wife everyday if daddy is at work. She still expects me to be home.