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It’s back to basics on this episode of How To Money as Matt and Joel engage listeners in an exercise to slash our budgets to the bare minimum. It’s a good exercise for several reasons, they say; first of all, it’s good to have in case of an emergency. Many people experienced the horror and uncertainty of sudden job loss during the pandemic, but what if it happened during a time when extra unemployment checks aren’t going to happen? It would be good to know exactly how much you need, minimum, simply to survive, and to already know what can be cut and what must be kept of your monthly expenses. Plus, it simply gives us more options. If you’re stuck in a job you hate because you think you can’t live on less than you’re making, this exercise might help you surprise yourself. Think of it as a fire escape plan for your budget – you hope you never need to use it, but if you do, you’ll be so thankful it’s there.
As longtime listeners of the podcast know, Matt and Joel love craft beer – but they won’t be including it in their barebones budget. Since this is being made for a worst-case scenario, it’s important to slash “until it hurts a little bit.” So all monthly expenses in a barebones budget should be absolute essentials, such as food. But here’s where you get creative: There’s likely more money in your food budget than you strictly need to survive, so what can you get rid of if you’re down to your last dime? Dining out, fast food, alcohol, and fancy cheeses or meats are easy places to pare down a food budget. Shelter is a little trickier; it’s not likely that you’ll be able to make a big move when you’re in financial difficulties, or that a move would even make financial sense. But are there ways to offset your housing costs? Maybe an extra room or two you can rent out to roommates to help make the mortgage?
Utilities is another line item where you can get creative. Maybe sweat a little more in the summer – and/or bundle up in the winter – to cut some costs. Transportation is harder to adjust; if you’re thinking of buying or financing a car, make sure it’s not at the top of your budget. That way, you can support the payments even during hard times. And of course you have to budget for recurring debt obligations – lenders don’t particularly care if you’ve run into some hard times, and it’s important to keep those payments made so you don’t dig a bigger hole for yourself. But can you modify your terms, or get a forbearance or a lower interest rate? When you’re preparing to be in a tough spot, make sure you know every trick at your disposal to help yourself out. Get all this great information and much more on this episode of How To Money.
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