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What Can I Cut Back On?

By: Steve Johnson

11/26/2008 - 39 Comments

As everyone begins to feel the economic crisis, the question that a lot of people are asking is, “what can I cut back on?”

A good friend of mine recently lost his job. The good news is that he found another job within one week, but the bad news is that his new job pays $12 less per hour.  $12 per hour is about $24,000 per year.  I’m very glad he got a new job, but he has been living paycheck to paycheck for the last decade and now even with a good job, he is worried about how he is going to get by. 

I have a hard time feeling sorry for him, because I have been saving money and living below my income in preparation for such a time like this, while he has been living beyond his means.  If you have not done so, I think everyone should begin preparing for the coming recession.  Here is a step-be-step plan to find something to cut back on and prepare for the coming recession.

  1. Figure out where your money is going (How Much Do Your Spend)
  2. Calculate how much of your income you currently need to live on
  3. Create a budget (How I Create Our Family Budget)
  4. Decide what you can cut back on to reduce your expenses (How to Find Something to Cut Back On)
  5. Create goals to reduce your expenses (My Long Term Goals)
  6. Consider other ways to lower your expenses like, selling something or moving into a smaller house (10 Reasons Why You Should Pay Off Your Mortgage)
  7. Continue to calculate how much of your income you live on until you are under 50%

If you still have a good job, than you have the advantage of starting this process today before you are forces to. This economic crisis is just getting started and it could be a long road, so the sooner you start dealing with it the better. 

Cutting back on things that drastically reduce your standard of living will be very hard.  But take heart, we are in this together as a nation and we need to help each other get through this time of need.  It could always be worse, so count your blessings.  It’s time to slow down and reflect on all the blessings we have in America and enjoy the good life we have. 

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