Turning Our Financial Recession Into a Personal Advantage: Part 1–Entertainment Cost Reduction
(c) 2008, Libertiny Financial LLC
No one can say that I haven’t bashed our Federal Government, Wall Street bankers or most Economists over how incredibly stupid they have been since the Greenspan era began–just read through my free blogs here on Government. I have and they are and continue to be stupid.
I know it’s depressing to think about how bad our economy is, but we have not seen the worst of it yet. Expect 2009 to be worse than 2008 since the massive layoffs that have occurred in the 4th calendar quarter of 2008 will not bite our economy until well into 2009. Also, we’re only in the first phase of the credit crisis: Mortgage crisis Part I. In 2009, we’ll live through the resetting upwards of balloon mortgage interest rates (Mortgage crisis Part II) with another round of people simply walking away from their homes. We’ll also live through the 2nd mortgage crisis, as people continue to tap this line of credit for living expenses and end up not being able to pay off their debt. Finally, we’ll also live through the looming credit card crisis as people max out all debt available to them in order to sustain a lifestyle that has become unsustainable in our present world economy.
Enough doom and gloom for you? It is for me.
Here’s the good news: We have a once in a century opportunity to reset our lifestyles so that they’re financially sustainable.
It’s going to be difficult, but as with all true emergencies, the fact that we’re in a crisis will focus our minds on what is necessary and unnecessary.
A note to our government, Wall Street and economists: This article isn’t for you. You’ll claim that by reducing personal spending, we’ll just exasperate the so-called “economic death spiral”–as people reduce their spending, pay off their debt and save money we’ll take money out of the economy. Over the short-term, you’re right. But your way didn’t work, so I’m sure that you can appreciate why our collective confidence in your abilities is near zero. It took decades of your mistakes to put us into the position, and now is the time for the people to correct the problem. You had your chance.
What Should You Do
1) Figure out home much you spend each month. Do it over this holiday. Use our free budget software, pencil and paper, or any other method, but get your baseline budget completed by 2008 December 31.
2) Do not have a budget category called “Miscellaneous.” If you need to add a budget category for something unique in your life, then add it.
3) Establish your budget for 2009
4) Focus on major spending reductions in areas that you can control. Two examples include: Entertainment and Groceries.
5) Stick to your budget. Never spend a dime on anything unless you have planned for it in advance. Better still, review your monthly spending and compare it to your budget before you go shopping. This will help fortify your resolve not to spend on anything unplanned.
Example of a Major Cost Reductions: Entertainment
Do you really need to eat out as often as you do? Have 500 cable channels? Video games? Internet access? And all the other things that should be in your entertainment budget? Pick one entertainment source and get rid of the rest for 2009. I suggest keeping your internet access since it provides low cost entertainment and news from around the world. Get rid of everything else. We did, and our lives have never been better. Eating out is once again a special treat. Without cable or satellite TV, we now have time to give back to our community which is both more fun and more rewarding than video games and TV ever will be. And community work can provide you with an extended “interview” that lands you your next job.
Tips on saving significant money on groceries will be addressed next month.
The Bottom Line:
Facing a problem is never fun or easy but it’s a first step. Next is putting together a plan on how to succeed. And the final step is living up to the realities of your plan. Be patient. Do all four of these things and 2009 will be a major, positive turning point in your life and the lives of your family.
Once we all have our financial houses in order, our economy will take care of itself.
Start today!
Tags: audio, books, budget, budgets, calculator, cd, family, finance, financial, home, libertiny, money, personal, save, saving book, Software, spend, spending less, spreadsheet
Congratulations on this sobering work.
It should taught in schools; junior high and up.
Certainly should be part of a wedding preparation no matter of the couple’s age.
I especially liked the entertainment cost reduction
options/suggestions. How very true. We will actually go outside to the backyard and help our neighbor to dig up that tree od bush he/she is working on and have a good chat at the same time.
Great work, Tom
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