Prepare for the Worst, Hope for the Best

by Marcy on January 28, 2009 · 0 comments

I know that this is stating the obvious, but things are pretty scary on the job front right now. And if you are part of a single income household (as I am) things might feel even scarier. Even those who are in seemingly secure jobs could be looking at pay cuts, stagnant wages and disappearing benefits. Not to mention dwindling investments (let’s not even go there right now!).

All of this aside, I am doing my very best not to panic. Panic is not productive. Instead I am trying to run a bunch of “what if” scenarios through my head. Where can we trim fat in our budget? How can we free up money if need be? What would we do in a worse case scenario? And while I’m not going to pretend that I know what it would feel like to have no source of income, I am doing my best to imagine. And it is a scary exercise. But a necessary one for most anyone, I think.

One thing that I have been consistently asking myself lately is what are our needs vs. our wants? I think a large portion our society tends to feel entitled to a lot of things (myself included sometimes). Nice cars, nice houses, a beach vacation every year, etc… But the truth of the matter is we are entitled to little as far as material possessions go. We need shelter, food, clothing. We don’t need vacations, cable and gym memberships. This is a hard pill to swallow for some (again, myself included), but true.

This week I sat down and ran a few numbers. I determined how far our emergency fund could take us in terms of living expenses. I started thinking about whether I should be placing my extra student loan payments into savings in order to have the extra cash on hand. And I determined we could free up several hundred dollars a month if we had to by:

– Paying the minimum on our student loan
– Paying the minimum on our mortgage
– Dropping our gym membership
– Cutting our grocery bill to $50/week (from our current $100/week)

More cuts could be made if needed. I have a feeling if put in the situation you could start getting pretty creative.

I’m not writing this post to bum you out but rather to encourage you to think about these things if you aren’t already. They aren’t fun things to think about, but are a necessary part of life. Ignoring your finances will almost always come back to bite you in the end…I have seen this first hand. Facing them head on and educating yourself can be an incredibly freeing and powerful experience. And while I don’t profess to be the perfect model of financial success, I will say that I am much happier now that my family is living on 50% less than we were during my working days because we are so much more aware. Not to mention more grateful for what we have.

What about you? Do you let yourself think about the “what ifs?” Where could you cut back if you had to in order to make ends meet? Have you been there? What did you do to survive during a bout of unemployment?

Are you overwhelmed? Do you feel like a lost cause and don’t know where to begin? Check out Dave Ramsey’s material. I am not getting any incentives for sending you his way. I just love his common sense, tell it like it is approach to money management and financial peace.

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