Where would you pinch pennies if you had to?
What if your income suddenly shrank a few sizes? Do you have any clearly identified luxuries that would be first on your list of items to go? Or would you have to scour an already streamlined budget to get by?
I’ve been asking myself these questions lately as the French media and the French population mull over various ways the government could control its debt. In recent light of the Greek crisis, responsible solutions promoted usually involve cutting spending (raising costs to average people) or raising taxes income and sales tax. . . or both. Of course, there will be squabbling about where to make cuts and plenty of political battles, yet one thing seems certain: here in France, spending power looks like its going to go down–again.
I’m curious to know if the mood in the States is the same–if people are resigned to pinching pennies to help pay down the government debt. I follow US news, but I haven’t noticed the same ruminations about a coming “tightening of the belts.” Perhaps Stateside, people are holding out hope that a nice upshift in the economy will shrink the government debt. Or perhaps its the knowledge that the dollar is easier to deflate if needed than the Euro.
What can you live without?
While a cost of living increase or a decrease in income are never a welcome prospect, I’m optimistic about my abilities to keep living a happy life. After all, most of us in the blogosphere have a higher standard of living than many, many people around the world. And we also have a higher standard of living than people of most other time periods as well. It’s always hard to take a pay cut, or to stop indulging in certain habitual luxuries . . . at first. But I’ve seen numerous examples of people living quite happily on far less than we spend each month.
My strategy for pinching pennies if needed:
Although I don’t know exactly when/if cuts to our income could be coming, I have already started to look over our situation to figure out the possibilities. Here are my steps:
- Take a look over our monthly expense spreadsheets and see if I can spot any ‘leaks’ in the budget.
- In our case, I’d say our grocery bill is a little high–ahem 300-400 euros for two per month. We’re lucky actually to have such an easy area to streamline. We could probably save 75 euros a month easily here.
- I’ve also got to admit that I’d be targeting our ‘fun’ category. Likely spots for cutting would be my pottery classes (sniff!) as well as a little pinching in the area of wine tasting. . .um, yes, that’s part of our budget actually. Here, we could save about 50 euros a month without causing ourselves too much pain.
- If I wanted to be even bolder, I could make plans to lower our rent. We splurged on a very nice apartment last year in a rather pricey location, but we certainly have the option of taking a lower-rent place–without getting ourselves into trouble as we did in Marseilles! We’d probably stand to save at least 100 euros a month by accepting a slightly smaller place.
- Cutting commute distances is another way we could potentially save, assuming my husband doesn’t mind teaching in the same town he lives in–he sometimes gets picky about this. I can’t completely blame him
Still, living closer to DH’s work would cut our living expenses by close to 50 euros a month.
Well, that’s 275 euros a month. Considering our living expenses are currently at about 2000 a month, that’s a little over 10% of our budget. If you have a bigger budget, you might be thinking that 275 euros is just a drop in the bucket–to which I’d argue that you might have an even easier time pinching pennies. If you’re used to living on 4-10,000 a month, you most likely have even more leeway than we do.
So how would you pinch your pennies?
Maybe you have no need to tweak your budget at all. . . or maybe you’re considering changing jobs and taking a lower income or even facing a layoff. Regardless of the situation, I’m curious to know how you’d go about losing the ‘fat’ in your budget if you found you needed to. Where could you cut painlessly? Where would cuts take a little more creativity?
We are pretty streamlined (or so we like to think). I do splurge on meals out (lots of take away lately) and coffees that would instantly be gone. We would also drop back to more meatless meals now that I have everyone on board with lentils. If necessary I would stop shopping organic as much (I would stay local) but I wouldn’t be buying organic chicken I just wouldn’t buy chicken.
We are overpaying on all of our debts and that could be cut back to minimum payments if necessary. Mostly we would look for a new income stream. DH could get a part time job he could wait tables on the bar shift which would be opposite my schedule and leave someone home with the kids.
I would also have a new drive to simplify and reduce what is in my home by selling off the excess.
We’re pretty streamlined, but we had to do this last year when we took a substantial pay cut to keep the family business afloat. It’s been tough to be sure! I’ve found that we can get by on a lot less than I originally anticipated, and things I “need” are re-evaluated with a closer eye. Do I really need four different cleaners or can I use baking soda and vinegar for everything? Do I really need more clothes or can I make do for now and scour the clearance section, still in season, in another month or two? The savings have definitely added up, and I’d say that I’m surviving quite well on a reduced income.
A little extra each month would be nice, but our needs are met.
I’m looking at a two-day-a-month furlough that will be a 10% pay cut starting June 1. For Californians, the “belt tightening” has been a lived reality for more than a year. Still, this is really only going to impact my savings rate. But if I had to economize quickly, here’s what I’d probably do:
First, I’d move to a studio apartment. I rent my current house from a friend for below market. It is far too large for me, but it is in an absolutely quiet neighborhood just blocks from the market and a huge park. This might save as much as $300.
Then, I’d trim the food budget. Cheaper coffee beans, cheaper red wine, cheaper cuts of meat. I could probably reduce spending by 20% in this category without really suffering.
Finally, I might ditch the 15-year-old car. Commute to work is only 5 miles, but the closest light rail station is a mile away. I hate getting all sweaty from a brisk walk when I’m wearing a suit. But it would easily save $125 a month.
Clearly, the solution would be a studio much closer to work. It would mean a neighborhood that is not nearly as quiet and crime-free. It’s good to contemplate the options, if they are some day needed. And it has helped me be more grateful for what I have now.
Americans are busy screaming about how they don’t want higher taxes but don’t want any programs cut. AKA the usual idiocy.
My responses are pretty similar to others, and I’m thinking I should probably at least try some of these now to pay down debt even faster. I’ve gotten lazy lately. Lately, ha! I AM lazy.
1. Cut out the wine and weed. (Yeah, I said it.)
2. Cut back on grocery spending. We eat like royalty and it’s a little ridiculous. I could easily cut our budget by at least 20% and probably not even really feel it. We spend around $450-$500 a month now. For two of us. Nuts. We eat a ton of meat, all locally-sourced, so that’s where we’d make the first reduction.
3. Drop the cell phone. I rarely, if ever, use it.
4. Cut out hair cuts and coloring and let friends do the cutting while embracing the grey. Doing that now and no one has screamed at the sight of me (yet).
5. No more new clothes, shoes or books. Or really, anything new that isn’t absolutely necessary.
I think I see some changes in my future!
Except #1. Not giving that up until I have to. ha!
I expect the quality of the food I buy will take a hit. The state just passed a 1 percent tax on food. Add that to the 8.6% on all other goods of the sort you buy in grocery stores, and that will hike up the supermarket bill significantly. No more trips to Whole Foods and my favorite local gourmet grocery.
If this had happened a year from now instead of today while I still had some money in savings, I’d be making do with my miserable, ill-fitting assembly-line glasses instead of springing for a fancy pair from an independent optometrist. And I certainly wouldn’t have refurbished the three- to five-year-old wardrobe as I just did.
Otherwise, I’m already living pretty frugally. No cell phone, no cable, no eating out, no unnecessary driving, no vacations, no movies or DVD rentals, no nothin’. There’s not a lot more to cut.
Re Funny above–A 1% tax on food would add only a few dollars/month to your bills, easily made up by buying a bit more carefully.
As for me–I feel that I am in the lap of luxury now–though I don’t go out to eat very much or buy new clothing. Our biggest expense is twice yearly visits to each of our parents–one on the east coast, one on the west (for all 4 of us). Honestly, if one of us lost our job, I would request a chip-in from the Aged P’s. 12 round-trip flights plus one long drive–very expensive!
I guess I could cut out my therapeutic shopping at Goodwill.
We still have room to cut back on the currently tight budget.
1. Only eating/taking out would be on payday.
2. Cut the grocery tab in half. We would just eat the cheaper cuts of meat and buy more generic products.
3. Cut Netflix down to the basic service. But NOT the directv – I’ve got to have BBC America!
4. Go guerrilla on the utilities. Wear more sweaters, cook oven meals or one pot, stop using the dryer as an iron, use bathtowels more than once before washing, fix the toilet that has a habit of running marathons.
5. Doggies would get their treat budget cut way back!
6. Sell my truck to save the insurance and gas.
I guess we could always find ways of saving more. We’ve lived thinner, we just would do it again.
I don’t think it’s just in France, it is right across the developed world that living standards will fall, in monetary terms. And by more than 10% too in the long run.
Trimming the fat can only really go so far, after that to achive savings means trying to live more outside the money economy, growing your own food, doing more of the work on your own house and the like.
When I listen to how my parents and particularly grandparents describe what life was like, comparatively our societies carry an awful lot of passengers and buy a lot of trinkets. Rather than trimming the fat, we may need to think a bit more about what we value in life, and perhaps consider co-operating with others nearby to make life easier and or cheaper.
One of the things that also strikes me about listening to how previous generations lived was that while their material living standards were much lower, there doesn’t appear to have been a shortage of happiness in life. Indeed, the happiness that was there seemed to be more about people and less about things and experiences.
I agree that this is a world situation. I’m on a small pension and have yet to find a job. I still have a college student at home. Obviously I could cut more if I had to, but the things I did going from almost a six figure income to barely a five..
My main savings have been half way cutting things out and the other half finding cheaper ways to do what I like. For entertainment, I go to the first movies of the day which are five bucks, look for free concerts and festivals for entertainment, as opposed to concerts and so on and so forth.
Things I could still do: I do have cable (bowing head in shame), so that I can watch the world cup and various movies and such. I dont have my home paid off so eventually I will down grade. I could be growing more produce for my own use than I do-right now I have flowers for looks. I could be more guerilla in my utilites. I can take it 80 degrees in the summer, but in the winter my heat is in the seventies to deal with arthritis. I could fine tune the grocery budget even more. Those are just off the top of my head.
I like where @ermine is headed with the observations above. Talking with my parents about how things were during the Great Depression in the ’30s, it’s clear they relied heavily on family and friends to cope with challenges and offset hardship with the joy of strong relationships. If things got much worse than could be handled by simple economizing, then I might think about convincing a group of people to join me in co-housing, serious kitchen gardening and co-operative food preparation.
Well, I could cut a lot more. But marriage = compromise, and the stuff I would cut is “his” stuff. TIe, the hub would probably shut off the heat before canceling our cable or cutting back on his eating out for lunch. I think the cable is a waste, but he loves it. As for his lunches out … you know, it’s fair. When I worked in an office, my lunches out were a needed break. So while it’s an expense we could lose, I understand how much he enjoys that particular expense. Having two dogs also ain’t cheap, but we’d have to be in DIRE straights before I gave them away.
straits.
sigh.
Gas $40 – No more driving to work.
Mortgage Overpayment $160 – We would only pay the $740 due instead of the $900 we’ve been paying.
Massage Envy Membership $49 – My husband loves it but agrees it would go first.
Vacation Account $250 – That’s how much we put in a month to take a couple of annual vacations.
Eating out $100
Entertainment Expenses $50 – We don’t go to the movies or participate in many paid activities, so that’s as much as we could cut. We’d still hang with friends, have potlucks, and board game though.
“Fun” Money Allowance $150 – We each get $75 to just spend every month.
Newspaper subscription $6.50 – We pay $19.50 for 13 weeks of the Houston Chronicle…I use the coupons but we don’t need them. I’ll buy more from Angel Food Ministries.
That’s all we could cut and still be happy. That adds up to $805.50 and includes cutting back on our extra mortgage principal payments.
If we were about to starve, I’d stop contributing up to matching in my 401k and stop maxing out our Roth IRA to save that $575 a month.
That $40 for gas is if we have to cut back because I lost my job…
I buy 80% of my clothing thrift. Cancelled Netflix and get movies at the library. Try to eat out only once a month. Use vinegar mixed with water for cleaning. Grow vegetables and utilize them during the winter. Buy in bulk, less trips to the store. Only buy generic. Cook and bake in bulk. No air conditioner in the summer and use space heaters during the winter. Planning errands to only once a week. Eliminate the home phone or cell phone. Wash clothes in cold water most of the time. Pay minimum payments on credit cards except the one with the highest interest rate. Do nearly all work on home and landscaping ourselves. Trim my family’s hair myself. Wash my own car and make sure that the oil is changed regularly.
It’s all small stuff, but every saved penny can add up and it can actually be fun! I recently had been working part time, although after doing the math, for my situation, it was actually cheaper for me to be home in comparision to the expense that the job required.
Maria–Sorry to hear your husband’s lost his job. Cutting deserts from the budget (and wine) seem like the first place I’d cut in the food department as well–although I’d risk my husband going to the grocery store on his own and stocking up on cookies or something
TreeSelling off the excess sounds like a smart idea. And I hadn’t thought about those who are paying more than the minimum on their debt payment. That is certainly one way to have more available funds each month.
The Saved Quarter Hmm–”a little extra each month” certainly is nice. I think it’s one of the best luxuries ever–knowing you have more money than you need. I agree with you on the cleaning supplies. How weird that you ‘need’ a different one for windows, kitchen, bathroom, etc, etc. I’ve never actually calculated how much you save my switching to vinegar and baking soda, but for me it comes under the category of something that’s so silly I don’t want to pay even a cent more for it.
Maus Yep, the belt-tightening in California. We felt it when we lived there too. It sounds like you’ve got several places you could cut if needed, although I understand the desire to pay a little more for housing to live in a safe, quiet neighborhood! Too bad your place of work doesn’t have an area where you can store spare clothes–then you could walk to work and change.
Consciously FrugalHah! I guess you know where to cut–if you must. I still haven’t been brave enough to let my husband cut my hair. It was looking kind of stringy and he asked if I wanted a cut. . .but I don’t want a divorce-that’s definitely not frugal .
Funny about Money Ugh! you just reminded me that my glasses are so old I can’t even remember when I got them and are rusting in spots!! I hardly can stand to wear them and have been going with contacts–maybe a new pair of glasses that can last forever again (and that I’ll actually wear!) would be more frugal. As for having not much else to cut but food, It’s interesting to see how many people have listed cutting food. I wasn’t expecting that so much–although I have to say, we’d be doing the same with a pay cut or tax increase.
Frugal Scholar Sigh! The family visits. We were just discussing how we’re going to handle this in years to come. Transatlantic trips to visit family will get much pricier if we ever have kids! Otherwise, I can kind of relate to your feeling quite frugal yet not deprived. I feel the same way.
Susan Wow, that’s quite a list. I think your point about having already lived on less making you know you can do it again is a good one too.
Ermine It will be interesting to see how it all plays out. I know a lot of people are experiencing a decrease in their standard of living–and at the same time, I hear other people saying they think that the recession is over. I wonder what they’re seeing that makes them say that, or where they live exactly. Your point: “One of the things that also strikes me about listening to how previous generations lived was that while their material living standards were much lower, there doesn’t appear to have been a shortage of happiness in life. Indeed, the happiness that was there seemed to be more about people and less about things and experiences.” This is so true. I know that many of the older generations enjoy having more comforts and more options now, but I often hear people reminiscing about the closer personal ties–perhaps these are grown out of the kind of bartering and mutual help that you were describing.
BarbAh the cable–a lot of people have cable Your cutbacks actually sound a lot like ours. And actually we went from 6 figures to barely 5 figures in a few years too–I hadn’t even thought of that. It’s rather striking. But it does seem like there is always more to save.
Maus–co-housing sounds like an excellent way to avoid moving out of your great/quite neighborhood. And kitchen gardening is something I’ve wanted to try for a long time. There are lots of associations that are already quite involved with that kind of thing–Food, Not Lawns (at least in San Diego) is one that I found fascinating.
EmilyYep! It’s pretty hard to cut back on a spouse’s spending. I try not to put too much pressure on DH to change his habits, because I worry it will become too much for him. I find that for myself, giving up on certain luxuries is a lot easier if it comes on my terms. If DH tried to impose spending cuts on me, I might balk–I mean, we are already so frugal as is. Maybe your DH is kind of hanging onto his cable as his last little luxury–I can kind of understand that. Although, like you, I feel that there are better ways to spend money than on cable.
Budgeting in the Fun Stuff What an organized budget! It’s nice to know you can come up with an extra 800 a month in a pinch. As for the Massage Envy–you can always learn to do massages at home and then make an exchange! DH and I are both pretty good at that. It’s a great thing (and saves a ton of money).
River RoseLooking at all the stuff you do at home, it kind of leaves me wondering whether your working outside the home wasn’t worth it partly because you wouldn’t be able to keep up with so much of the money saving activities you do. Those are time-consuming. It reminds me of my own realization that me working full-time here in France, was just not worth it for us.
We’ve actually had to try to streamline even more than normal this year, due to all the economic problems in the UK and the ash problem interfering with flights, our holiday cottage that usually keeps us ticking over has took a huge hit… we do have bookings but only 1/4 of normal. This of course is a massive blow to our precarious budget.
So, Im planting extra food, our odd meals out (we can get a lunch with wine and coffee for 9euros the pair) have to stop. The main expense we have is fuel for the van, so we just cut our trips anywhere to a minimum. I have friends who know to collect me if they are coming to town at all.
Now summer is finally here for us, Im doing the washing by hand out in the old cement wash tank in the yard… saves on electric and water…
A ten euro saving for us on our budget equates to 100euros to a normal wage earner…
If I had to streamline my budget (which has certainly happened in the past) I’d probably take a pretty extreme approach. Rather than looking at where I could CUT, I would look at what I absolutely had to have — and then cut everything else or prioritize after that. And there’s not all that much that we absolutely have to have.
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Trish, if you are needing new glasses, you can get get them frugal from http://www.zennioptical.com. As low as eight dollars a pair! I could not find on their site whether they do international shipping, but they call themselves “Zenni International” so I’d say its a good chance. Worth contacting them about, at least!
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There are several budget categories we could slice off a lot of spending including:
1. Cable (just watch what’s on the computer or DVDs)
2. Eating out
3. Entertainment budget
4. Food
A year and a half ago we had a list drawn up with our expenses prioritized. We succeeded in reducing our expenses about 12% total. We had plans in place in case our income dropped further or in case I was laid off.
We were also transparent with the kids making sure they understood that things like music lessons are wonderful luxuries. In the end we didn’t have to cut that far luckily.
I’d ditch my car – a foolish luxury if there ever was one; plant more veg; eat more tuna & less salmon; get busy selling books and stuff on Amazon & eBay; quit the bookbinding classes, which I’m going to do next year anyhow; make wine at home; have friends over for potlucks instead of eating out, not that we entertain or go out much; re-think our vacations and travel closer to the ground – I still want to experience a youth hostel, as I gather they aren’t really about youth at all anymore. Bill will retire this time next year and I think we will be doing all of these things then, so may as well start ‘practicing’ now!
If necessary, my number one cut would have to be the beer budget 
I think I could save £100 a month, hmmmm. Then the other vices would have to go – like the smoking – I need to stop that for so many reasons, not least maybe £40 a month… and the odd meal out/takeaway once a week or so – maybe £30 per month there. So cutting out luxuries and vices and bad habits so far could save £170 a month – yow!
I could drop the mortgage back to regular payments and save the £50 monthly overpayment, that brings monthly ‘cut-backs’ up to £220 a month.
When I compare that to my monthly income, it’s a very *sobering* number (pun intended )
Otherwise I’m quite frugal – bought hair-clippers recently, for three times what I normally pay for a single clipping by the barber; all my utilities and insurance have been price-compared and switched; TV went years ago; mortgage will be paid off end of the year anyway, so that gives me a lot of breathing space later. My entertainment needs are minimal – internet, library, radio, and good company at the pub….
All of which suggests that next year, if I can actually develop some discipline over my vices, I might even be able to achieve a 50% savings rate and do my health some good into the bargain!
We live on about 55% of our income so if either of us lost our job we could carry on indefinitely on one salary. The difference would be that the extra 45% would stop going to retirment savings, kids education savings, extra mortgage payments and travel. We live on a fairly modest budget already. Off the top of my head the only things we could immediately would be a bit on groceries, my 2 coffees/wk and the phone. The cell, internet and alarm monitoring are all on multiyear plans. Downsizing the house would save plenty but isn’t a quick solution in a slow economy. Our area didn’t have a drop in property values in the past couple of years but selling takes considerably longer than it used to. We buy used vehicles with cash so there is no savings to be had on monthly payments, but we could take one vehicle off the road for the short term and save on insurance. We already do all errands in one trip per week so I don’t see any reductions happening there.
I guess the advantage of living so far below our means as our normal mode, is that it would take a double job loss to really cause us distress. With severance and then our savings I can’t ever see being forced into drastic actions to get us through until we found new jobs.
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I think I would cut our 1-2 a month eating out.
Then I would probably start cutting our dessert budget – as I bake a lot, we like to have ’something good’ every day.
I would stop buying wine (mostly used for cooking) and I would stop buying beer (this is for our guests usually).
Not to much though if I do the math.
we actually are in this special situation – my husband lost his job in january and from then we start cutting our expenses drastically. Hope we wont have more ’surprises’ to come!