Now that you’ve gone through all your income and expenses, you have a much clearer idea of where you stand. Now you can work to reorganize, reduce, and even eliminate things from your budget for survival during your financial crunch. As you go through this process, you’re going to be creating cash to use for living and getting by in the most beneficial and healthy manner for your situation.
Set up your income and expenses to focus on the income you know for sure you’re going to have and the expenses you know for sure you must pay to keep a roof over your head, food in your belly, and pay for life-extending mandatory medical care like insulin for a person with diabetes.
- Housing – Include whatever it cost you to live in your home beyond your rent or mortgage. You can get an idea of what you spend by looking at your bank statements. If you have a mortgage, you can call your company to find out if you can stop payments for a period and put them at the end of your loan, eliminate private mortgage insurance if you’ve paid off enough of your home, and find other measures to take to reduce the payment if you call your loan provider.
- Food – You’ll want to set a fair budget for this if you’ve never budgeted before, as this is an area you can easily overspend. The US government says that for a family of four to eat healthy food, it will cost between $150 and $300 per week. Food waste is a huge problem, so this is an area you can find savings.
- Transportation – If you need your vehicle to get to work and back, to the store and back, or other reasons, then you should keep it even during hard times, if possible. However, if you really don’t use it or need it, you might want to consider selling it during a hard time to avoid the extra expenses. If you must have it, consider only buying value vehicles, used, for cash that get excellent gas mileage.
- Utilities – You have to pay your electric bill every month. You can get on a budget billing plan in some areas that make the bill more similar each month to help you in this area. You can use less power by insulating your home and cutting down how much heat and air conditioning you need. Include the internet as a utility if you need it for work, school, and communication with the world.
- Insurance – Health insurance, car insurance, home insurance, rental insurance, and so forth are all needed expenses that you should not cancel if you can avoid it. Instead, you can seek better deals. If you’ve had a reduction in income and are currently getting insurance through the affordable health care act exchanges, contact them because you may be able to reduce your payments.
- Child Care – If you have to pay for childcare due to your job, this is also a need. If you only pay for it to give your child socialization, but you really don’t need it, then it’s a want. You may be able to talk to other parents in your area to work out a cooperative childcare program to eliminate this very high expense. It works on a points system so that it’s fair for everyone who participates.
- Min Loan Payments – If you have loans, especially unsecured credit card loans, you should switch to only minimum payments during any financial crisis to give yourself more cash for needs. If you’re paying on student loans, you can call your loan provider to ask for a discount in payments or even a deferment to alleviate yourself from paying some loans temporarily.
- Min Business Expenses – If you have your own business, don’t forget to figure out the min amount you need to keep your business going. You have software, banking, contractors, and so forth that are all required to keep your business healthy. Knowing what the minimum is that you need to keep running is essential.
As you go through your expenses, you’re going to know right away in your own mind if it’s something that can be reorganized, reduced, or even eliminated – even if only temporarily – so that you can get through the crunch. You’ll end up with a break-even number that you must bring in to make it on this survival spending plan.
