FYI Magazine

How to Make Financial Cutbacks

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For the thousands of people who have succumbed to economic woes, adjusting financial strategies has become a necessity. Downsizing financially could be the key to staying afloat or a temporary measure that helps individuals make it through the economic rough patches.

Although many people are programmed with the mentality of acquiring many material things and having the biggest home on the street, when money is tight, it could be time to reassess values and make some cuts wherever possible.

* Consider renting.It could be a better financial decision to sell a home -- even if it won't yield what it could a few years back -- than hold on to a home you can't afford. Homes are expensive, with some of the biggest expenses going toward maintenance and upkeep. In a rental situation, a landlord is responsible for maintaining the property, saving the renter money. A smaller residence also means less spent on heating, utilities and furnishings.

* Cut out luxuries. It is not uncommon for a modern household to have several mobile phones, multiple televisions with cable hook-ups, DVR capabilities, and three or more cars parked in the driveway. When financial times are tough, it's time to start weeding through the items that are nice to have but not wholly necessary. Consider cancelling cable, or at least reduce the mega-package to one that's more economical. Some extra-curricular activities, such as gymnastics or karate lessons, may have to be temporarily curbed as well.

* Sell what's not used.Homeowners can take the time to go through their belongings and make piles of items that are seldom used but in good working order. These can be sold in yard sales or even via online auction sites.

* Stop dining out. It's possible to cook and enjoy food for a fraction of the cost of dining out. One of the easiest ways to save money is to curb spending on breakfasts, lunches and dinners away from home. Also, those $3 cups of gourmet coffee can quickly add up. Stick to pots of Joe brewed at home.

* Look for low-cost entertainment. Look for free events and other low-cost ways to have a good time. Borrow movies from friends or family members and have a movie night at home with microwave popcorn. Many cities and towns host free entertainment, such as cultural events and tours. A trip to the local park can be free and fun.

* Shop off-brands. Many times brand name foods and clothing are more expensive simply because of the advertising spent to promote them. Store brands or off-brands could be of equal quality and much more affordable.

* Downsize the car. Now may be the time to trade in a leased vehicle or sell a financed car for a used one that is more affordable. Previously owned cars are often under warrantee and can make more financial sense than a brand new auto with a high sticker price.

There are a number of ways to make some financial cutbacks to improve household budgets. These actions can be temporary until finances improve, or a good way to have improved long-term saving habits. TF111286

 

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