A lot of articles I write here are about fine-tuning your frugal habits, budget, and spending. It’s as if I ask you to take a scalpel and slit open the tiniest of holes in your finances in order to reap that extra little efficiency. But what if that is not enough? What if after obliterating your drugstore bill, slicing your grocery bill, taking your entertainment bill down to a measly $0, and only cooking on an open fire out in your backyard you are still not getting anywhere?
It sounds like it’s time to take more drastic measures; you need to forget about the scalpel and break out the machete. We generally don’t like to talk about these options because they make for oftentimes drastic changes in a person’s lifestyle. But these options are on the table for almost everyone and they could make the difference between retiring in fear versus retiring with dignity, or even the difference between foreclosure/bankruptcy and financial independence.
Did you bite off more than you can chew at your current apartment/home? Or did your financial situation change since moving in? It will be much more difficult (and perhaps not wise with the down market) to get out of a mortgage and sell a home than to move out of an apartment at this point. Still, both should be mulled over as an option. When is your lease up? How much would it cost you to get out of your current lease? It may be worth it to break the lease and free up much-needed cash flow.
Get a Roommate/Rent a Room Out
My Aunt lives in a great area in a posh city, and has done so since her 20s. How did she afford this? She has rented out 1-3 rooms for the last twenty years. She gets to split the rent (and now mortgage as she owns it), utilities, electricity, etc. I had a roommate in my first and second apartment right out of college. While not ideal to many people, this could quickly free up cash for other expenses and allow you to stay where you are. If you live in a two-bedroom+ apartment, make sure your lease allows for a roommate, and discuss this with your landlord. Even though the market is in favor of landlords right now due to higher demands for renting, they might work with you to not lose a paying tenant (that is, if you have been a good tenant up until now).
Get a Second or Third Job
Cutting your spending can only take you so far if your income is too low to begin with. In some cases, you may actually just not be making enough money to cover necessities and any financial obligations you have. If picking up extra hours, taking on more responsibilities, a raise, or promotion has not worked with your current employer (all of these possibilities should be exhausted before taking on a second or third job), then it is time to see what you can fit into your schedule. Waiting tables, seasonal work, freelance work, mowing lawns, consulting: these are all options for you. It will be hard, but it should not last forever.
Get Rid of the Second Car
This will take some flexibility, faith, and the go-ahead from your work. Paul and I are considering this right now as the head gasket just blew on our new-used car (ouch!). We are attempting to get his work schedule changed to my compressed work schedule, or I will have to give up my compressed work schedule. If one of our employers can budge on this, then we are donating or scrapping our truck and going with just one vehicle. The savings should be immediate and huge: currently we each pay $200 per month in gas, and the truck costs approximately $58.00 per month to insure. Assuming a $50 savings in gas each month, we are looking at a savings of $1296 per year, on top of normal maintenance issues and oil changes.
Get Rid of Cable and Internet
Heck, you can even sell the television(s). Americans (and myself included, though we only have one small television in the living room—I refuse to have a television in our bedroom) have accepted a television and home computer as a right, not a privilege. That is why I’ve included this category in this machete article and not in a scalpel article. If you ever watch financial shows like ‘Til Debt Do Us Part, you see that a person can be completely in the dumps financially, eliciting all kinds of sympathy…and they are being taped in front of their large screen, plasma television. Get rid of it! If your finances and future security is at stake, how can you possibly justify cable and internet? Go to the library, use a friend’s computer, or use your work computer after hours if you have to.
Quit Cold Turkey
Smoking, alcohol, and any other addictive habits will suck the life out of your finances. I should know—Paul took up smoking again about six months ago when his job went out of control, and since December it has been sucking about $100 per month out of our budget. Yuck! Thankfully last weekend he quit cold turkey. It’s been a rough week to say the least, but he is doing beautifully and he made the right choice for his health, our life, and our finances.
What are some drastic measures you have taken? Any other ideas?
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