Here we are - at item #10, already. You've done a lot to get your life back on track after your layoff. Great job so far! Now, it's time to get down to the (temporarily) more painful part of your situation. Budgeting and cost-cutting. We heard that! The "B" word. Yeah, nobody likes to work on a budget. But, especially during times of financial stress, a budget is a necessity. If you don't know exactly where every penny goes, then how can you effectively start cutting expenses? If you just randomly start slashing expenses, you may cut essentials while ignoring non-essentials. A good budget can prevent that mistake.
In previous items, we've already had you working somewhat on this task. By now, you should have (at least) two lists; one listing "Needs," and one listing "Wants." Look them over very carefully one more time. The more you have listed as "Wants," the better off you are going to be when we finish this task. Your layoff has changed the picture drastically, and what used to be "Needs" can (in some instances) be re-categorized as "Wants." You just have to put all of your spending habits under a microscope. This is not optional. We're about to show you why you need to do this diligently.
How about an example of how you might be able to save $2,000 over the next year? Quickly (don't think long and hard on it), how much do you (and your spouse, if applicable) spend per year buying coffee at a coffee shop? One cup a day? Three cups a week? Whatever, just estimate your yearly spending - in your head - stay away from that calculator!
So, let's assume that you and your spouse stop every day and buy only one cup of coffee each at one of the many coffee shops out there. Now for a little calculating. Coffee at those places costs from $2 to $4 per cup, on average. At $3 per cup, you are spending about $2,200 per year for that coffee. Give up coffee? We can't! How can we even suggest that? Well, we're NOT suggesting that you give up coffee. Calm down. We are only suggesting that you change the way that you get that coffee.
At your local discount store, you can easily buy a cheap coffee maker for $15. You can buy a two-pound can of generic coffee for $5. About 1/3 of a cup of coffee in a 12-cup drip coffee maker will work for most people. You can also buy a 20-count package of 14 ounce insulated cups for around $2. A decent thermos can be had for under $15. Assuming that the coffee maker and thermos only last one year, your TOTAL coffee cost for the year will be around $150! That's over $2,000 less than buying coffee by the cup. It's actually less than what you are spending in one month at the coffee shop. We realize that some of you will say that cheap coffee makers and generic coffees make you choke. So let's try it with premium brands.
A premium coffee maker (such as a top-of-the-line Cuisinart) will set you back around $100 to $150. Premium coffee will cost $10-$20 per pound. A fancy thermos will go for about $35. And, fancy insulated cups will cost around a quarter apiece. So, again, assuming yearly purchases for the coffee maker and the thermos, what will your yearly costs be? We'll use the high end of the prices quoted here. The total? $580 per year! Premium products all the way and you still save over $1,600 per year. Note, that's not even changing the coffee shop prices to the premium price of $4 per cup. Actually, if you were buying premium coffee at those shops, you would spend almost $3,000 per year!
You may not even drink coffee. This is just an easy example of how the little things really add up when you get down to itemizing and calculating the costs of everything. A pack of gum, a couple of soft drinks or tea. We have a tendency to think that the small things don't matter. This couldn't be further from the truth. Water is better for us anyway - but remember, bottled water is expensive and just adds to the landfill problem. Use filtered tap water in reusable bottles, instead. Speaking of the landfill problem, in the coffee example, a reusable coffee cup (regular or travel type) is much cheaper and considerably more environmentally-friendly in the long run too.
Now, think about this example and go over your "Need/Want" list - again. After reading this item, you may see that there are a few more "Needs" that can qualify as "Wants." More tips in the next items.
Don't forget to make your required job search contacts this week.
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