What Have You Cut in the Last 2 years?

by Kristina on May 17, 2010 · 2 comments

scissor cutting

With the economic crisis over the last couple of years, people have been losing their jobs left and right. As people lose their jobs it is sure that they have had to make some adjustments in their personal budgets. My question to you is what personal monetary sacrifices (if any) have you had to make over the last two years?

As a personal financial planner I have seen my clients cut various material things such as playing the lottery, vacations, and unfortunately savings. Yes, that is right; one of the first things that people cut out of their spending is their personal savings.

I advise my clients to try and keep their savings contributions as much as possible during a personal financial crisis. The reason that I say this is that no matter how bad things are now, it is possible that they can get even worse. I am sorry to say it, but it’s true.  During a job loss financial emergencies can have a greater impact on a person’s budget then when they have a regular income. Therefore people should always be prepared for the worst case scenario.

As an alternative to cutting savings contributions I suggest to continue saving but instead of saving for retirement save in your non registered investments, and instead of saving for the long term save in cash or liquid investments.  This way if you do need some of your emergency funds they will be readily available. Investors can also choose to lower the percentage of their savings contributions instead of cutting them out completely.

I also recommend that people cut various personal (and sometimes excessive) expenses. The problem is that we don’t realize they are unnecessary costs until we are really faced with the question “Do I really need that? Or can I live without it?”  People generally spend most of their income on food and housing.  In most cases people cannot make housing cuts (on short notice) so therefore we need to make cuts on our food budget. Eating out probably happens more than it should. Also if you want to eat out go and pick up the food  to save on the delivery charges.

I can tell you what I have lived without over the last two years…random visits to the pharmacy, unless I need a prescription.  Ladies, I hope you can relate to this. Sometimes I go into the pharmacy for deodorant and I come out one hour later after I have spent $100. Those days are over. I am definitely more cautious with my money these days. Not necessarily because I have lost a portion of my income, but mostly because I know that since I work in finance my position could be cut at anytime. I like to be prepared.

(Photo by sociotard)

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{ 2 comments… read them below or add one }

1 Jeff @DeliverAwayDebt May 17, 2010 at 1:12 pm

Over the last two years I can’t think of anything I haven’t cut back one or have gone without. Except the house payments. The grocery, gas, energy, clothing, fun, personal care budgets have all been slashed. Flowers for the house have been cut. Any house related upgrades are no longer and option (for now). The lease cars are gone and replaced with “paid for” models. The only darn thing I haven’t be able to cut is the mortgages. Oh well my 2nd mortgage will be gone in a few more months, thanks to the second job.

Why take such crazy actions? Oh yeah, I forgot to mention I was deep in debt. I still am, but we are taking the proactive approach and taking care of business before something bad happens. The amazing part is that we don’t really miss everything we’ve cut back on. Wish I would have done this years ago. Oh well, we get smarter as we age eh?

2 Kristina May 17, 2010 at 11:22 pm

Hi Jeff,
I wanted to thank you for sharing your story with us. I think it is safe to say that a lot of people have made cuts over these past few years. Often is the case that we are unable to cut our biggest expense…our mortgage payments/rent. As I was thinking about your reply I realized that I have made other cuts in my spending. I didn’t even notice them until I sat down to really think about it. I guess that over time I became extra cautious about where I am spending my money. I try not to do without, but I have definitely cut back on a lot of things. I have not been able to make any rent or car payment cuts but my grocery budget was cut from $120 a week to $75 per week.

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