In many ways, it feels like we as a nation are in the very beginning stages of coming to grips with the recession. A recession is similar to a major tragedy, which psychologists say we deal with in five steps.
1. Denial – Refusing to believe what has happened, feeling shocked. “This can’t be happening.”, "It will come back."
2. Anger – Accusing others, such as a supreme being or friends, for what has occurred. “How dare you let this happen!”, "Bush and congress did this", "How can their be a God if he let this happen"
3. Bargaining – Asking the universe or a supreme being to “cut a deal” with you. “Just let me keep my job.", "The government should bailout my company as well."
4. Depression – Experiencing listlessness or exhaustion combined with feelings of helplessness, guilt and lack of interest in life. “I might as well give up.”, "Why go to work anymore"
5. Acceptance – Facing the loss and moving on, returning to setting goals in your life and focusing your energy more positively. “I’m ready to deal with this now.”
The headings are full of Denial, Anger and Bargaining (Bailouts). But some, who have been talking and thinking about the slowdown for over a year are now ready to move on to Acceptance. This is the primary reason that I have been more than willing to discuss and embrace the dire truth about the direction of the economy for quite some time now. I want to get to Acceptance and the only way to do that is to step through Denial, Anger, Bargaining and Depression. If we all need to go through this process, than the sooner we get through steps 1-4, the sooner we get to step 5.
Most of America is just beginning to think about and discuss the economic downturn and how their family will be affected. At this stage, there is a lot of talk with little action. And there is good reason for that. Psychologists tell us that you cannot skip to step 5, without going through step 1-4. People need to work their way through each step and talking about their feeling is how they move through each step.
When we get to Acceptance, we will be looking for things to cut back on with the least amount of impact on our lifestyle, while having the largest impact on our cash-flow.
Here is a list of 25 things to consider cutting back. What are you going to cut back on?
- Cable TV
- Cell phone’s
- Un-budgeted misc spending
- Daily habits, like coffee, chewing gum, etc.
- Supporting your children’s daily habits
- Extra things for the kids like new stylish clothes
- Holiday gifts
- Consider re-gift or returning unwanted gifts
- Energy, turn off lights, turn off the heat in unused rooms
- Books, magazines
- Entertainment, toys
- Eating out
- Junk food, like colas and chips
- Shopping for top brand products and styles
- Large purchases, like cars and houses
- Consider reducing your families number of Dr. visits, self medicate
- Credit card purchases, consider using cash
- Services, like house cleaning and lawn care
- Hair styles, cut your own hair or have a friend do it
- Vehicle maintenance, change your own oil
- Private education for your children, consider homeschooling
- Family pictures
- Reduce your 401k investments
- Reduce your car insurance, by increasing your deductible or reducing your coverage options
Some of these things will obviously be harder to cut back on then others and may have drastic changes to you or your family's lifestyle. But, none the less, decisions will need to be made and something will have to be cut.
Cutting expenses is an emotional process, which is why it may be better to spend a few weeks talking through what you are considering cutting with your friends and family so that everyone fully understand why you are doing it and how you will benefit. Take the time to answer questions and listen to their advice. Someone may have an idea that you didn’t think of with a greater savings.
The recession is likely to be deeper than the previous recession as the transitions from consumer to saver is well under way. But remember, this is still the land of milk and honey. Everything that we as a nation are cutting back on are non-essentials. Many people in the world could live off the crumbs on our tables. This is important to keep in perspective. America is still the largest economy in the world.