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Monday, October 27, 2008

Fighting Debt With Extreme Savings

Worried about the economy? How worried are you? If you yelped, 'Very!' in answer to that question, it may be time to consider extreme savings. If your job is in jeopardy, your debts are high and getting higher, and you don't have an emergency fund - enough to cover at least 3 months' expenses - it's definitely time to consider extreme savings. Extreme savings involve more than just smart shopping. You need to do more than skip manicures. You need to cut your monthly expenses down to the bone.
Achieving extreme savings may be painful, but remember: it's a way to gain some control over your finances. And you won't have to do it forever. Think about what your absolute essentials are: food, shelter, medical expenses, health and other insurance premiums, electricity, heat, phone, transportation. Extreme savings call for extreme measures. Add up what the bare essentials cost you each month, plus payments for credit cards and other debt. Cut out everything else.
That's right - no cable TV, no Internet access (unless you need it to make part or all of your income), no DVD rentals, no eating out, no new clothes. Watch TV at a friend's house; use the Internet and borrow DVDs from your public library. Again, remember: it's not forever. Extreme savings are necessary in tough times, but tough times come and go. You'll make it. What's more relaxing, having dinner and drinks at a restaurant or knowing you can pay the mortgage this month? The next step in your quest for extreme savings: see if you can trim anything off of those absolute essentials. How much would you save on groceries if you substituted store brands for name brands, used coupons, looked for weekly specials, and cut out junk food entirely? How nice is your student loan company? Will they allow you to suspend or lower payments until you're out of the woods? Can you get on budget payment plans with your gas and electric companies? Read More>>