The news has been filled with coverage of the financial freefall into which we seem to be headed, and I thought this might be an ideal time to share some tips on stretching our remaining dollars. Feel free to offer other suggestions in the Comments section.
And really - even if we somehow manage to avoid a catastrophic depression, these are still smart moves in a chaotic financial world. Get started!
1. Cut your credit cards. You should have done this years ago, but now is better than later. There is no such thing as an "emergency" credit card, by the way: save your money for unforeseen financial problems. Credit accounts inevitably get filled with purchases of unnecessary items, and the exorbitant interest rates mean you will pay for everything you bought 3-4 times until the cards get paid off, like those expensive Nikon rifle scopes you bought for the gun you fire twice a year at deer you never hit.
2. Buy used cars and drive them until they die. I have always had a fondness for the $500 clunker with some life left in its engine, but these days you can save quite a bit of cash if you snag a 4-cylinder beast that runs fair enough. I bought a 1995 Hyundai for $700 last June and it is still running well, and in the past 15 months I have only spent about $600 on maintenance, which works out to a $40 car payment.
3. Shop at resale stores. Sure, you won't find much in the way of Abercrombie & Fitch apparel, but I suspect that the coming recession will see many well-dressed folks in the soup lines. You can find a ton of dress shirts for $2-$3 that look as good as a $40 new shirt, plus there is always the chance you might find money in one of the pockets. Bonus!
4. Get a second or third job. I currently have six part-time jobs generating income, not counting blog advertising and the occasional freelance journalism piece. An extra job will put even more cash in the bank, and you will be too tired afterward to go shopping and waste your hard-earned cash. If you just lost your job, take any job you can find to stay working, as the lack of work will eat at your self-esteem and burn right through your limited cash.
5. Develop a realistic budget and stick to it. Cut your entertainment and frivolous expenses to a bare minimum, and account for every last dollar you spend. Rent a $1 video and pop your own popcorn instead of dashing out to the theater for a $12.50 Director's Chair new release film. Share CDs with friends and burn a copy instead of dashing out and buying every new disc you fancy. Even better - become a regular at your local public library, where there are tons of new releases in music, film, and books.
6. Use sites like eBay to get rid of clutter and squeeze out some cash. People will buy almost anything online, and the junk you might want to toss to the curb probably has some cash value. At the very least, box up unwanted items that have usefulness and take them to the Goodwill, making sure to get a tax receipt for next year's return.
7. Delay big-ticket purchases. Yes, that washing machine sounds like a 1978 Peterbilt 359 semi with a blown head gasket and a rotted exhaust, but it still runs. Chances are it will also cost less to repair than replace, especially if you know someone handy with machine repairs.
Make the tough decisions. Do I REALLY need cable TV? Is a land line necessary in the age of the ubiquitous cell phone? Would I be better off buying a monthly bus or Metro pass instead of owning an expensive car? Wouldn't I get more exercise and save money by cutting my own grass? If you look critically at every dollar you spend, you will find areas that can be cut without much sacrifice, but most folks would rather put off making decisions that require change. Take the initiative - it's your money and your peace of mind.