Off the bat you are doing the right thing by acknowledging that you have a setback and need to look for a solution. I think too few people talk about what is a hugely important thing – which is personal finance. It can ruin relationships, bring people to depression or worse suicide. Conversely, with effort and persistance it can also help set a person on the road to economic independence and freedom and the ability to live a life they always wanted.
I am a huge believer in personal financial software and can’t recommend this enough to people who are debt, who are young and just starting their careers or who are well off and living on fixed income. Whatever status a person is in having data at their fingertips is key to making decisions. About 6 years ago I retired a year or two earlier than anticipated at age 39. At that time I had already compiled years of earning and spending data on Microsoft Money. Any spending decisions going forward were driven by the spending data we had already compiled. A few benefits to having this data close by is that I see all the companies I spend money on each month. Verizon, AT&T, Columbia Gas, etc… This allowed me to contact each company individually and start to request any savings opportunities I might have. If personal financial software is absolutely not an option the old pen and paper method or spreadsheet work fine too. I was really surprised at all the help I had when I told people at some large companies that I really enjoyed their service but recently had an income setback and need to know if there were any opportunities I would have to save some money. Again, all this is derived from the data being organized in front of me. I have also learned that like others sometimes I get too excited about the chatter around me rather than concentrate on specific issues that are affecting my personal situation. For example, everyone talks about the price of gas and how much a person can save by "dropping that cup of Starbucks coffee per day." While these things are true there are other things to consider. When I retired I really went to battle with taxes and ways I could further reduce my tax liability. I can’t tell you how much I have saved by becoming more tax efficient – far more then concentrating on that Starbucks purchase would have ever saved me. Back to the reference about Microsoft Money. They stopped making it around 5 years ago but I think it can actually be downloaded off the internet for free. It might be called Microsoft Money Sunset version.
Here are just a few other habits and decisions my wife and I have made - (She retired almost two years ago)
1) We share one basic cell phone with a monthly plan that has unlimited voice (flip phone). We do not have smart phones. We also maintain one extra emergency phone that nobody else has the number for - this is a prepaid phone and costs us only about $10 per month total. It allows us to communicate with each other when we are separate. We do not have a texting plan but we try to let friends and family know we are very accessible by e-mail which we check frequently throughout the day.
2) Part of our taxes go to the library and park system so we use these services often. I’ll contradict what I have written in other posts but we frequently use the library for DVD’s, books and CD’s. I generally vote against levies for the library and metro parks but since they keep passing and we are paying more tax we will use this to our advantage if it helps our budget. Many of our recreational items are things that do not require us to take out our wallets such as running in the park, riding bikes, the library system, reading… Trying to find activities with friends who want to get together can be challenging. Everyone wants to go out to dinner to those chain restaurants where you throw down $20 for pre-made food and we would much rather just have them over for coffee and conversation.
3) We shop at Costco. The membership fee pays for itself in the lower cost of gas. Most of our grocery purchases are in bulk. We always by the largest family size of toilet paper and other commodities that are frequently used because the savings add up.
4) We do not buy a pack of gum, a candy bar, a lottery ticket, a Pepsi… bottled water. What we use we buy in bulk and leave the house prepared so we do not make those silly $1 purchases when we are out all day… I work a part time job and bring a mason jar of water or green tea which I sip and keep in the fridge during my shift. I also always pack my lunch. Why spend $6.00 on Jimmy John's crap when I can spend $2 on a very healthy lunch I have made myself?
5) We do not donate to causes because a friend asks us if we can. We give to causes WE feel passionate about. That means being humble enough (yet uniquely passionate enough about staying committed to staying on the right financial path) to say to a family member who’s child is selling something for school…. “No” or better yet “Sorry but we can’t at this time but if little Jimmy wants to earn some money for his cause we have some work around the house he can do to earn some money that he can donate himself…” That said we are known to occasionally shock a family member with a very nice present occasionally for no reason at all such as paying for a person we cared about to go to a foreign country for vacation just to say thanks. So for us it’s not so much about not spending as spending on people and things we are committed to and get joy from giving to…
Good luck! – I know this does not address medical bills or student loans but if any suggestion helps it might worth the long read. Again, I think it’s a subject far too many people become too proud to talk about and that just makes it worse. Understanding that spending less does not mean having less fun is also key to staying sane while trying to get back on the path.
Two books that my wife and I have found very helpful are:
The Ultimate Cheapskate’s Road Map to True Riches by Sylvania OH author Jeff Yeager.
The Wealthy Barber by David Chilton