The best strategy for cutting your household expenses is to do a thorough review of your spending from the past 6 months. Be ruthless. For every; line item, ask yourself if this is a need or a want. If it’s a want, cut it until we have more financial security. Then, automate as many payments as you can. The fewer opportunities you have to choose to spend money, the fewer chances you’ll have to make decisions that you regret later.
The biggest expense that most people have is their housing expense. If you haven’t lost your job, then it’s going to be tough to justify a mortgage deferral, but if you are a renter, you should ask your landlord about getting a discount for paying early or for paying ahead. You’re looking to get a discount rather than a deferral, since, if you defer rent, you’re going to have to pay it later.
I think there are a couple of categories of spending to defer until later. The first is getting rid of subscriptions. I’m not talking about downsizing to the point that you’re memorizing nutrition labels on canned food as your entertainment rather than having a streaming service. But, if you, for example, have a gym membership, cancel it. You can’t go to the gym anyway (by the way, I’ve been doing the Charles Bronson prison bodyweight exercise program (#aff), and it’s SMOKING me, so it’s quite possible to get a great workout with just bodyweight exercises). The second is home improvement projects. If you were thinking about doing that kitchen renovation or getting new carpet, put it off. The last thing you want to do is be smack dab in the middle of a kitchen renovation and find out that your whole department just got laid off because of the coronavirus pandemic.
If you get furloughed or lose your job, you need to do two things immediately. First, file for unemployment. A lot of states won’t pay you based on the date that you get laid off, but, rather, based on the date that you file. Secondly, contact your mortgage provider to talk about deferments or talk to your landlord about working out a payment program. This is the time to go absolutely bare bones. I know you want to support your local restaurants, but no more takeout. You can’t support anyone if you have to file for bankruptcy. If it doesn’t give you food, shelter, transportation, and the ability to find a new job, it’s out. This is where I would cut streaming services and look to use my public library for entertainment. The Dallas Public Library, for example, has free Kindle books to check out as well as movies and music for their members. Also, if it comes to making your rent/mortgage payment and your auto payment or your credit card payment, let the credit card ride. It can wait. You don’t want to run the gauntlet of losing your home or your car once the moratoria are lifted.
I’m a big fan of mint.com to track all of my expenses. If you don’t trust the Internet that much, you can always use Google Sheets or Excel to come up with your own budget. If you’re teetering on the edge of trouble, you need to be tracking your spending daily. Also, set spending goals. If you come under those spending goals, like spending less than $X in a month, treat yourself to something cheap but nice, like a fancy pants Starbucks drink, as the carrot to encourage good behavior in this time of financial stress.