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Beat Recession Advice #2: Cut your expenses, save money and conserve cash

September 27th, 2008 · 1 Comment

"Save for a rainy day" — well, the rainy days are ahead of us. 🙂

All of my advice are common sense, but have you been doing any of these to cut expense and save money? Let’s take massive action NOW to prepare for the rainy days!

  • Figure out how much cash you have, your monthly burn rate (I.e. how much cash you need to pay rent/mortgage, utility bills, student loans, childcare, grocery, etc.), and how long you can last given the current cash level and burn rate. One great tool for you to track expense is Mint.com . It automatically uploads your online bills, categorizes the expense items, and provides you detailed reports on your expenses.
  • Determine areas that you can cut your expenses. You want to conserve as much cash as possible. Below is a list of expenses you could cut or reduce:
    • Cable TV/direct TV/dish network bill.
    • Cell phone data plan: unless you have a company sponsored data plan for your blackberry, do you really need to access email/Internet from your cell phone?
    • Do you have both cell phone and land lane? Maybe it’s time to cut the land lane.
    • Your Satellite radio subscription.
    • Once-or-twice a day Starbucks run.
    • Pack lunch instead of eating out.
    • Student loan: if you have a loan from the government, you could postpone your loan payment if you experience financial difficulty. Contact your lender for more details.
    • Rent: are you single living in your own apartment? If your lease is flexible, it might be time for you to move into a shared house to cut down your rent. Or, if your folks live nearby, you might want to move home for a while.
    • Eating out: it’s time to cook at home — it’s cheaper, and it’s healthier.
    • Gym membership: A lot of people go to gym once or twice a month or never. If you are one of those people, cancel your gym membership. However, if you’re a regular exerciser, I highly recommend you to keep your membership. Exercise reduces your stress.
    • Gas: if you have two or more cars in the family, is it possible for you to take the bus instead of driving? Or work from home one or two days a week? You’ll also reduce your carbon footprint.
    • Grocery: Use coupons. Buy bulk. Shop online at Amazon.com.
    • Childcare: if you live near your relatives, can they help take care of the kids for a day or two each week? The saving will be significant.
    • Buy a used car instead of buying a new one. Instead of buying a Toyota Prius, buy a Corolla.
    • Mortgage: this is probably the biggest expense item. If you have an excellent credit history, consider re-financing to a lower rate. The interest rate is pretty low now. However, it’s probably hard to get any loan approved nowadays. But, give it a try if you have good credit history.
    • If you plan to travel during Thanksgiving or Christmas, try to book the tickets well in advance.
  • Put your savings into safe investment vehicles.
    • Stock market has been extremely volatile lately. In the near term, put your 401K money into Money Market fund and CDs. If you want to invest in stock market, I would only invest in Index funds that track the broader market.
    • If you have cash saving in banks’ checking, saving, CD accounts, make sure they’re protected by FDIC.
    • I wouldn’t rush to invest in things that I don’t understand (e.g. Gold, Silver, etc.)

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