Let’s face it, we all have discretionary expenses that we can cut in a time of crisis. We may think of these as necessary for survival, but you’d be surprised how little you can get by with and still survive. The reason so many personal finance-minded people encourage everyone to maintain a fully-funded emergency fund is to help you make it through such crises with as little pain as possible.

But sometimes a crisis can drag on beyond the window your savings have bought you. Well before you reach that point, you should be cutting back on all the easy stuff and starting to eye cuts to things that are progressively more difficult.

Easy

The “easy” things are far from necessities and can easily be cut out of most people’s budgets even in normal times. These are the things on which we spend money to make life more comfortable or interesting, not things that keep us fed and warm. But in times of financial crisis, these things should be thrown out the window as soon as reasonably possible to help that emergency fund last as long as it can.

• Fast Food – Everyone could certainly be healthier without fast food, but in a time of crisis it shouldn’t even be considered an option. You’ll generally pay at least twice, if not ten-times as much on a prepared meal than if you had bought the ingredients and assembled the meal yourself.
• Cable/Satellite – Mass media is fast food for the brain and provides no real nourishment that you can’t find elsewhere for cheaper. When it comes down to watching LOST or keeping food on the table, I’ll gladly say, “Bye bye, Jack!” If you crave input, read the newspaper or a book at your local library or even consider checking out a DVD, but don’t spend your reserves just so you can keep your brain running in idle.
• Internet – There are just as many reasons to keep this “luxury” as there are to dump it, but we’re talking about a financial emergency here. If you require an internet connection to be able to work, consider cutting back your speed or going to dial-up as a short-term fix; if you don’t require the internet, cut it completely until times are better. If you need your regular fix of your favorite blog, One Caveman’s Financial Journey, you can always head down the library or a coffee shop and use their publicly-available resources for an hour or so.
• Cell Phone – There’s nothing (important) a cell phone can do that a traditional land line can’t do. If you’ve run into a tough patch, you’re not going to get out of it by wasting your money on a texting plan. Unless you’re in a contract that would cost you more to leave than to drop, there is no reason to keep the ear-leech live. You can sign up for basic land line service for usually less than half of a traditional cell plan. My land line costs between $12 and $17 a month depending on the number of calls we make, whereas our cell phone plan is $60/month.
• Subscriptions & Memberships – This includes the newspaper, Netflix, your gym membership, and anything else you belong to that takes money out of your pocket. Yes, you can get coupons out of the newspaper that will more than offset its cost, but you can save even more by shopping smart and asking your neighbors for the coupons that they won’t use – an emergency isn’t the time to be overly prideful. Fortunately with Netflix, you can put your subscription on hold for up to 90 days where they won’t charge you, but you also won’t get any new DVDs.
• Lawn Care – Not everyone pays a third-party service to maintain their lawn (I certainly don’t and it shows), but that’s a pure money sink when you have better things to be saving your money for. But this also includes self-care of your lawn. I have a very large lawn and my mower can blow through 5 gallons of gas in less than a month. By cutting back on my mowing schedule (my community requires it at least every 2 weeks and to keep the length below knee level), I can save a decent amount of money and by not watering the lawn I save money on water and I can mow my lawn even less.

Moderate:

If your personal emergency continues on for long enough and your short-term cost-cutting measures haven’t shored up your finances, you have to face the fact that it’s time for some deeper and more painful cuts. The next round of cuts will be increasingly inconvenient, but may be necessary to help you weather through an extended sour patch.

• Car – Like it or not, a car is really not a necessity for most people. With the increasing cost of gasoline, cities and states are looking into larger investments in public transportation. While it may be distasteful, inconvenient, or slower for to you to ride a bus or train, you can save an increasing amount of money by ditching your personal transportation whenever possible. Even carpooling can go a long way toward reducing your expenses. And don’t forget about traditional self-powered transportation such as riding a bike or walking. Not only will you get much-needed exercise, you will be burning exactly zero gallons of expensive gasoline.
• Land Line – Communication is a powerful thing and the relatively cheap communication afforded by a telephone is useful, but even $15/month savings can be enough sometimes to right an imbalanced budget. If you still crave contact, consider meeting with people in person or (heaven forbid) writing a snail-mail letter. Yes, a land line is extremely useful in case of emergency. Being able to dial 911 is important, but emergencies are very rare. For most emergencies, you can be safe enough by running outside and screaming for a neighbor to help and dial 911 on your behalf.
• Retirement Contributions and Other Savings – Notice I didn’t list this in the “easy” category… Most rough patches don’t last for too long, but your retirement is something (hopefully) that will always be in your future. You don’t want to short-change your future self just because you were too selfish to cut all the easy things before cutting your savings. Of course, if you have zero income, it’s really hard to save anything, but if you’re at least making a little money, you should still be socking away whatever you can.
• Appliances – Some appliances are more necessary than others: You can do without a dishwasher or a clothes dryer, but a refrigerator is harder to avoid. Turn off what appliances you can to help save money – this also includes air conditioning, hot water heater, furnace. Depending on the season you could use this stop-gap measure for at least a few months to save a little extra money.

Difficult or Extreme:

Before you reach this stage, you should have already sought and begun using outside help. By the time you get to cutting the difficult stuff, you should be concerned more about your personal well-being than about keeping modern conveniences. If you’ve reached an emergency level where you can’t even afford to pay for your basic necessities you can’t be worried with keeping the lights on or even making house payments, it’s time for a dramatic intervention.

• Mortgage – If things are bad, and I mean really bad – bad to the point where you have cut everything and you still can’t pay for your house – you still have a few options. A bank would always like to avoid foreclosure and the costs associated with it, especially in today’s market, so you can use that to your advantage. If you can afford to make a partial payment, contact your bank and see if you can set up a revised payment plan that will let you keep your house and at least cover part of your interest due. If you can’t afford anything at all, your bank may defer payment for one or two months to give you a chance to catch up. But if your bank won’t work with you, you have very few options: sell the house, rent it out (if your mortgage will allow), or get foreclosed upon. It’s a shame when people lose their houses, but it’s still more important to be able to eat.
• Utilities – You have to be careful with this one. In my area, if your power or water are turned off, they will temporarily condemn your house and forbid you to live there until the services are restored. It’s a pain for those who are severely hurting financially, but it’s a measure the community takes to keep squatters and vagrants out to reduce crime as much as possible. Depending on the season, you may be able to drop natural gas service at least, but expect some pushback from your local government if you start shutting off more of your utility services.
• Meals – Let’s face it: Americans are well-fed. When you consider the measures that people must take in other parts of the world to survive, we definitely have it “easy” with the average three meals-a-day. It won’t save you much, but cutting out just one meal a day could reduce your expenses enough to make the difference between keeping your house and losing it.

Sometimes it doesn’t matter what you do, you just can’t avoid a rough patch. Just like the economy as a whole, your personal economy will have its ups and downs. The idea is to save enough during the ups that you can comfortably weather the downs. But when the downs start looking really down, you cannot be afraid to take increasingly drastic measures to keep you and your family fed and warm. Hopefully it will never come to it, but don’t be reluctant to cut it all for the sake of your loved ones. As long as you can survive the crisis, you can always work to rebuild later.

If things are turning sour, or even look like they might, it’s a good idea to start cutting back right away. That way you’ll be ahead of the game if it does happen or you will have had an opportunity to save even more if it doesn’t. Nobody wants to deal with a crisis, but knowledge is key when it does come up. Like the Boy Scouts say, “Be prepared,” and you will be ready if and when it happens.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

I recently returned from a business trip that earned me two full days of overtime pay plus a per diem allowance of $54 per day (unfortunately, I only get 3/4 of that amount on travel days). Through smart spending and my already-reduced intake due to my diet, I was able to pocket half of that as pure profit. How exactly do you take what should be a full day’s amount of money for food and turn it into pocketable cash?

The trick is to eat smart. Unfortunately, you can’t not eat on a business trip, especially when you’re with customers. It will look out of place and will focus undue attention on you. And it’s really hard to concentrate when your stomach is rumbling like a thunderstorm across the plains. What you have to do is pick your meals well.

For breakfast, check if your hotel has a continental breakfast. Considering a purchased (non-fast food) breakfast could cost up to $10, the cereal, fruit, bagel, and juice your hotel provides can fill you up just as much (and maybe healthier) for free. If you think you may get hungry later, grab an extra apple and take it with you.

For lunch, eat just enough to satisfy your hunger. I was able to get a lunch that kept me on my diet and filled me up enough to make it to dinner for under $5. If you eat too much, you’ll almost certainly get drowsy as the afternoon wears on and it’s bad form to nod off during a presentation to or from a customer.

For dinner, eat normally but do not over-indulge. Dinner is why you were saving your money. Depending on your location and tip, dinner can easily cost $30. Don’t order anything too messy and keep the alcohol consumption to a minimum (and none if your customer or boss drinks none). All three nights, we went to a local microbrewery and restaurant. I always picked a modest entree and one beer, at most. My largest bill, including tip, was around $26. My boss, on the other hand, was spending nearly $60 after food and drinks – he spent more than his daily allotment on just one meal!

For the 4 days I was gone, I will receive a $189 reimbursement from my company. Through smart eating, I spent $92 – less than half of my per diem. That means, I walk away from this trip with $97 extra dollars lining my pocket. $97 means 1/3 of an extra car payment, most of a student loan payment, or about 1/4 of what I need to buy a new bike. That’s one heck of a snowflake! And I wasn’t even being over-the-top with frugality.

It’s not hard to find curious ways to make and keep a little extra money, but it does take some creativity and a little sacrifice. All you have to do is determine how much money you need to survive and pocket the rest!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Last night, my wife approached me with some bad news: The checking account is running dangerously low, even though I was just paid yesterday. “How in the world could that be?” I nervously asked.

“Your credit card bill took more than half of it, the car payment is due soon, and we have $250 in church offerings coming out before your next paycheck. In all, that leaves us with $200 in the checking account.”

What I couldn’t understand is how my credit card bill was so painful even after the raise and our efforts to reduce our spending. So I took a look for any “unusual” transactions…

New summer-y clothes for my daughter – $40. Ok, this one is understandable. She’s 16 months old and obviously can’t wear anything from last summer. We got 4 outfits and that will last her for a while, especially since the grandparents are all-but guaranteed to buy her some outfits.

Grass seed for the continuing rehab of my lawn – $90. When we moved in 2 years ago, my lawn was an embarrassment. Where there weren’t dead spots, there were weeds. After 2 years, the lawn is starting to look really good. If I slack off, all of my hard work will be for naught, so this expense is a must.

Next six months of web hosting – $30. Well, this one is obvious. Without this charge, I wouldn’t be writing on this blog any longer. And, besides, it’s amortized over 6 months, so in my mind it’s really only $5.

Easter lunch – $30. In a departure from our old traditions, we went out to lunch with my parents and a few family friends from church. Surprisingly, this was the only time we dined out in the month of March. Not too bad if you consider that.

Groceries – $380. Wait… Three hundred eighty dollars?!? Well no wonder we’re in a world of hurt! In the three shopping trips this month, each time we didn’t have enough in the checking account to cover the grocery bill, so I “wisely” put it on my credit card. I tried to justify my dangerous behavior with the fateful remark, “I’ll just put it on the card for now and we’ll earmark the money when my next check comes in.” And guess what, we couldn’t earmark the money because a different bill came due about that time. Our stop-gap came back against us in a painful way.

What it boils down to is that I was trying to justify my extra spending throughout the month by pointing to my raise and hiding behind my credit card, even though I knew most of the raise was already accounted for in increased givings at church and more withholdings to my 401(k). I’m terribly embarrassed to say that I have failed to follow my own advice and my family and I are paying the price. We have another much-needed grocery trip coming up this week and we are two weeks away from my next paycheck with just $200 available in checking. Even if we sacrifice some of the less-necessary items off our list, the grocery bill will likely still reach $100.

It looks like it’s time for a spending freeze in the house of Caveman. I need to turn my ship around yet again. Hopefully this time I’ll learn my lesson.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

My employer’s fiscal year starts in July, so every June we make our benefits elections. This past June we were starting to realize our looming financial trouble: The life we were living before the baby could no longer be sustained given that we now only had one income.

Insurance costs were becoming one of the largest hits to my paycheck, so we decided to take a slight gamble and go one grade lower on the health and dental insurance. In all, we were going to get back about $100 each month that we really needed at the time to cover our bills. We were betting that we were going to stay healthy over the course of a year and not use up the health savings account that came with the plan.

But that bet is never a smart one to make… Especially with a baby and one income.

In just 8 months, we made three trips to MediQuick (non-emergency medical service) when things needed to be treated faster than our family doctor could schedule us in, one trip to the emergency center for my wife’s strange allergic reaction, a couple of doctor’s visits, and a number of well and sick baby trips to the pediatrician. In short, we botched the bet and blew through the whole health savings account way before it would be refilled again. Now we have to cover the full expense that the insurance would have covered, up to $1,500 total.

When you think about it, we got off lucky. We made a bet that never should have been made and we weren’t completely burned. We’ll likely have to spend the full $1,500 before the end of June, but that is also why we have the emergency fund.

Actually, chances are that we’ll burn through the $1,500 before the end of April. Next Wednesday, I have an appointment for an MRI of my brain. While I was at the doctor, I mentioned that my migraines had increased in frequency and intensity, so he ordered the MRI for “just in case” there is a physical reason for the change. This drives the point home even further that you can never be sure what turns your short- or long-term health will take.

The point is, when times come that you need to cut back to save money, insurance – really any form of insurance – is the very last place you should look to scrimp. Your health is important and you never can know when an emergency will arise that can outpace your insurance limits.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

A post on Frugal Dad this morning about the tax rebate got me thinking about how hard it is to not go out and spend it like a “good little consumer.” Every now and then, I get this nearly uncontrollable urge spend. It’s usually triggered by a large purchase or an unexpected influx of money – both of which have just happened in my life. I start thinking about the nice things that I want or (believe) I need and, before I know it, I’m hitting craigslist, eBay, Amazon, or Newegg depending on which itch needs scratched. There are a few things that have been tempting me lately that I know I don’t have to buy just yet, but know that tax rebate is just around the corner only turns up the heat…

I’ve been thinking about dropping my gym membership since I haven’t been using it. I’m reluctant to do that, though. I signed up when the gym was just opening and offering membership at 1/2 the normal cost. I’m paying less than $30 a month whereas everyone else is paying at least $60. But I know that even if I’m saving money relative to all the other gym members, I’m still spending $30 a month – $360 a year – with no real benefit to me. But if I’m going to drop the gym membership, I need to still get my exercise.

Because my knees aren’t that great, I love working out on an elliptical. I would love to purchase one, but I know that a good one will set me back a great deal of money – way more than 1 year’s worth of gym membership time. But if I had an elliptical in my basement I know I would exercise more since I could just drop whatever and go downstairs. Having to drive 15 minutes just to go work out in a large enough impediment that I just avoid going to the gym altogether. I would love to purchase one, but it just doesn’t make sense right now. Besides that, I need to teach myself to stick to my goals and decisions. I already decided the rebate will go towards paying off the car and I need to make sure that’s what happens with the money.

I’ve also thought about getting an Apple computer for use in my consulting business. I’ve never owned one or even used one since the Apple IIe, but the allure of a shiny new piece of computing equipment stirs up that “funny feeling” inside. It would be very nice to use a Macintosh for doing web design work and being able to test websites on both the PC and Apple platforms, but again I have to make myself wait. I had to remind myself that if the business could use equipment like that, the business will have to buy it. I’m going to earn myself a Mac instead of buying one just because I think I need it.

I know I can’t be alone on this. Have you run into the seemingly-uncontrollable urge to splurge? What do you do or tell yourself that helps reduce the desire to spend?

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Last night, I went out and purchased a new washer, as I said I would in my previous post. After a lot of research and price shopping, we decided on the Whirlpool Duet washer and pedestal. After the 10% discount, sales taxes, and delivery charges (which will be refunded to me in a VISA prepaid card), our total came to $1,270.

Since I originally ran my calculations based on $1,350, I ran them again to see how our savings would look with the new balance:

Originally, I speculated that we would save a total of $30.98 over the course of a year and now that number has grown to $32.24. I did change one other thing, though: instead of 12 payments, I changed it to 11 with the final payment being a double payment. My reasoning for this was to eliminate the risk of going over the 12-month deadline and incurring all the late fees and interest that would completely negate all of my savings gains. If you are attempting this yourself, I recommend the same.

Banks count on the fact that you will not keep track of that last payment and if you miss the deadline by even a day, you will be smacked with all of the forgiven interest from the first year plus late fees. They know a few people will complete the plan successfully, but the overall profit from those who don’t is much larger. Don’t be one of those victims. Keep good track of the deadline and pay it off early to make sure there is no chance of getting pinged.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Before my wife and I were married, we inherited a washing machine from my parents. It was sufficient for our needs; it cleaned clothes well enough and it wasn’t too loud. Occasionally it would rock a bit, but it never started its own marching band.

Our faithful mechanical servant has lived through a lot – far more than the average washing machine. Before we acquired it, it saw two moves; and in the last seven years we have owned it, it has weathered five more. Unfortunately, each move aged the washer and wore it down.

When I came home from work this past Friday, it finally gave me notice that it was tired of its duties and wanted to retire. But, following in the spirit all of my temperamental equipment seem to exhibit, it didn’t just quit. No, that would have been too simple. Instead of just quietly dying and refusing to do another load, my washer decided to lock me out of my house!

Our laundry room is situated in what could be considered a “mud room” off of our garage as you enter the house. It’s a place where it’s easy to strip down if you’re dirty so you don’t track your filth through the house. And it’s also the place where I enter the house after I return home from work. But on this particular afternoon the door simply would not open. It was unlocked and it did move in slightly, but I couldn’t push the door past the jamb.

Defeated and my calls for assistance failing to reach my wife’s ears, I pulled my keys back out of my pocket and trudged to the front door. After finally gaining entry to my house, I headed to the laundry room to find what prevented my ingress. What I beheld was my washing machine defiantly pinning the door closed after walking nearly a foot to accomplish its goal, straining against the various cords and tubes that connect it to its electrical life source and the plumbing. It was a marvelous scene and I now wish I had taken a photo for proof of the malevolence of this particular mechanical beast.

Now my wife and I have determined we must replace the aging washer, but we certainly do not want to dip into our emergency savings unnecessarily. The washer still cleans clothes, we just have to make sure we’re sitting on it before it enters a spin cycle. And it’s not like we hadn’t thought many times before about replacing it. While the washer was sufficient for our needs when we were first married; now that we have a child, the low capacity and relative inefficiency of the washer is costing us a great amount of time and money.

So now, instead of using every penny of the anticipated tax rebate (if it ever comes) to help pay off our car loan, a great majority of it will now be used to buy us a larger, more efficient front-loading washing machine. It may cost nearly $1000 up front, but I believe the long-term benefits will definitely outweigh the short-term cost, especially since we do not plan on moving again for a very long time. I just hope we can last until this supposed rebate arrives…

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

This is getting crazy! Even with meticulously tracking our spending, we’re still coming up short.

Just a couple days ago, we received our gas and electric bills for December. OUCH! It was a very cold December, with the month averaging 35 degrees Fahrenheit. Even with keeping our thermostat at 68, our combined bills came to over $300!

I really despise our power and gas companies. They’re profiting hand over fist and they’re complaining that if they don’t get to raise rates, they won’t be able to do their maintenance. I call shenanigans on that. They just raised rates across the board last winter which brought the pain to everyone and now they want to do it all over again.

I don’t mind this company making a reasonable profit. There is no reason to be in business if you can’t profit. But their profits more than doubled before the last rate increase, and I’m sure last year set a record profit for them.

I’m all for returning to the age of utility regulation. Yes, you heard me right – a libertarian wants industry regulation. You see, the free market only works when there is competition. They dropped regulation to foster competition and none showed up. Nobody came to this party because they would have to drop so much money in infrastructure and supply that it wouldn’t be worth it. That means we’re left with a monopoly provider who gets to punish its customers mercilessly. The only solution is to wrap the industry back into regulation to allow them to profit but also force them to operate in the public interest by improving services, researching cheaper and cleaner power sources, and such.

Since there is no relief in sight, I have been forced to cause further discomfort to me and my family by dropping the thermostat another degree to 67 and turning down the water heater a notch. Hopefully the rest of the winter won’t be as cold…

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

I have finally uploaded the first version of the Expense Report spreadsheet. It’s not much, yet, but with your input and suggestions, I will definitely make improvements.

The goal of this spreadsheet is simple: Input every single cent that leaves your person. In order to get accurate data, you must track every single penny of every single transaction that takes money away from you. Regardless of if it’s a quarter in a parking meter, a $5 fast food “meal,” or a $200 microwave, you must add it to the spreadsheet.

Also do not forget to include any payments to loans or bills that arrive. I input the date the check was written or the bill pay transaction hit as the date in my spreadsheet. You may choose to mark the date the bill arrived or its due date. It doesn’t really matter what date you use as long as you use the same one every time and you enter every single bill.

At the end of the month, create a new sheet and start tracking all over again. Eventually, you’ll have enough data to know where all your money is going. Use that data to reign in spending where you can and set a workable budget.

Ok, now it’s your turn. Download and use the spreadsheet and see what happens. Let me know how or if it helps you and what the spreadsheet might be lacking. I look forward to hearing from you!

—

Note: I uploaded the spreadsheet in Office 2007’s format. If you are using an older version, make sure you have the Microsoft Office Compatibility Pack installed to be able to open the file. I will do what I can to make sure the spreadsheet is workable in older versions, but I cannot fully support anything less than 2007.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

After our Christmas budgets were tightened by the unfortunate timing of my truck’s radiator failure (to the tune of $400), I figured we would probably have a few good months before something new popped up again.

NOPE!

Last night as my wife was trying to prepare dinner for our daughter, she mentioned to me that she thought the microwave wasn’t working right. I decided to test it. I put her dinner back in the microwave (yummy peas and carrots), entered the time, and pressed “start.” The light turned on, the table rotated, the fan spun: everything looked and sounded normal… until I took the food out of the microwave.

It was still cold.

Shoot! Well so much for luck and timing being on our side. So this afternoon, instead of spending $200 on books, supplies, and equipment for my new business, I’ll be spending $200 on a new microwave. JOY!

Thank heavens for our emergency fund. While we probably won’t have to tap the fund to make this purchase, it’s nice to know it’s there as a buffer in case anything bigger goes wrong. Unfortunately, that also means we’re unlikely to add much money to savings this month. I suppose that’s just the way the cookie crumbles.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com