Living Well in a Down Economy For Dummies E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Ratgeber
• Sprache: Englisch

Seitenzahl: 508

Veröffentlichungsjahr: 2023

Beschreibung

As the economic pendulum swings, it's time to start living smart Living Well in a Down Economy For Dummies offers ideas for keeping more money in your pocket during a topsy-turvy economy. With more than 100 tips, it shows you how to tighten your belt without feeling a big pinch in your day-to-day life. Discover innovative and effective ways to cut expenses and boost your income in today's economy. It isn't about making sacrifices. It's about setting priorities. Gain the skills you need to take control of your spending, make smarter choices, and stop the financial drain that can accompany a downturn in the economy. Inside, you'll find practical advice on how to live and thrive when prices creep up or your income falls. Get tips for spending less in all areas of life--utilities, groceries, pet care, entertainment, and beyond. And figure out how to slip in some self-care without breaking the bank. You can do this, thanks to this no-judgment For Dummies guide. * Reduce your expenses by cooking at home, doing your own car maintenance, cutting your own hair, and more * Discover creative ways to increase your income, interview for better-paying jobs, and continue to save for college or retirement * Save money on home maintenance, insurance, and other reoccurring costs * Minimize your tax bill, improve your credit, and avoid foreclosure If you're looking for practical tips on how to make ends meet that you can implement today, this For Dummies guide is for you.

Leseprobe

Living Well in a Down Economy For Dummies®, 2nd Edition

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Published simultaneously in Canada

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Library of Congress Control Number: 2022950998

ISBN 978-1-394-15964-2 (pbk); ISBN 978-1-394-19542-8 (ebk); ISBN 978-1-394-15965-9 (ebk)

Living Well in a Down Economy For Dummies®

To view this book's Cheat Sheet, simply go to www.dummies.com and search for “Living Well in a Down Economy For Dummies Cheat Sheet” in the Search box.

Table of Contents

Cover

Title Page

Copyright

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go from Here

Part 1: Facing Off Against a Recession

#1: Determining Your Net Worth

#2: Calculating Spendable Income

#3: Calculating Required Expenses

#4: Calculating Discretionary Spending

#5: Tracking Expenses

#6: Setting Spending Practices

Delve into Your Dreams

Determine Which Dreams Matter Most

Develop an Action Plan

#7: Creating a Budget

Step 1: Categorize Your Expenses

Step 2: Estimate What You Spend

Step 3: Calculate and Adjust

#8: Breathing Away Tension

Change the Way You Breathe

Breathe through an Emergency

#9: Tensing Your Way to Relaxation

Relax Your Body, Part by Part

Use the Quickie Method

#10: Stretching Away Your Stress

#11: Practicing Habits of Effective Stress Managers

Part 2: Bumping Up Your Bring-Home

#12: Updating Your Resume

Step 1: Prepare Your Core Resume

Step 2: Study the Job Description

Step 3: Customize Each Spinoff Resume

#13: Choosing the Right Resume Format

#14: Making Your Resume Stand Out

Don’t Tell It — Sell It

Reach Out with Strength

Use Keywords

Discover the Art of Lost Articles

Delete the Leave-Outs

#15: Preparing for a Job Interview

#16: Standing Out during an Interview

#17: Dealing with Video Interviews

#18: Employing Post-Interview Tactics

Write an Influencing Letter

Follow Up

#19: Trying Quick Ways to Find Good Jobs

Call-Email-Call

Phone a Friend (Okay, Ten Friends)

Blast Your Social Media

#20: Looking into Federal Jobs

#21: Checking Out Best Career-Changing Tips

Change by Retraining

Use Your Network

Work Up from the Bottom

#22: Figuring Out Whether You Should Change Your Career Course

#23: Telecommuting as an Alternative to Traditional Work

#24: Persuading Your Organization to Let You Work from Home

#25: Considering Self-Employment

#26: Getting Acquainted with Home-Based Businesses

#27: Setting Up Your Home-Based Business

Develop a Business Plan

Consult Outside Professionals

Choose a Legal Structure

Decide on a Name

Take Care of the Red Tape

Get the Insurance You Need

Decide on an Accounting System

Develop a Marketing Plan

#28: Taking a Few Steps Before Leaving Your Job

#29: Getting the Cash Flowing

#30: Surveying Tax Deductions Available to Home-Based Businesses

Home-Office Deduction

Other Important Tax Deductions

#31: Recognizing Often Overlooked Ways to Save on Your Taxes

#32: Ensuring the Survival of Your Home-Based Business in Tough Times

#33: Boosting Your Household Income with a Side Hustle

Part 3: Putting Your Personal Finances on Firm Footing

#34: Categorizing Your Financial Records

#35: Setting Up a Filing System for Your Financial Records

#36: Finding an Insurance Agent

#37: Having a Balanced Insurance Program

#38: Deciding between Permanent and Term Life Insurance

Permanent Life Insurance

Term Life Insurance

#39: Choosing a Permanent Life Insurance Policy

#40: Selecting a Term Life Insurance Policy

#41: Avoiding Life Insurance Mistakes

#42: Saving Money on Your Homeowner’s Policy

#43: Looking into Umbrella Policies

#44: Buying an Umbrella Policy Wisely

#45: Reducing Risk and the Expense of Car Insurance

#46: Getting the Right Car Insurance Coverage

#47: Cutting the Cost of Your Car Insurance

#48: Continuing Health Coverage When You Leave Your Job

#49: Capping Out-of-Pocket Health Expenses

#50: Saving on Individual Health Coverage

#51: Using Health Savings Accounts

#52: Tapping into Short-Term Health Insurance

#53: Examining Health Insurance Options for the Self-Employed

#54: Considering Long-Term Care Insurance

#55: Seeing the Tax Benefits of a 401(k) Plan

#56: Knowing the Limits on 401(k) Contributions

#57: Reducing the Amount You Invest in a 401(k)

#58: Timing Investment Allocations to Match Employer Contributions

#59: Protecting Your Retirement Goals with a 401(k)

Meet Minimum Standards

Avoid Losses in Bankruptcy

#60: Withdrawing Money from Your 401(k) with the Fewest Penalties

#61: Borrowing from Your 401(k)

Figure Out How Much You Can Borrow

Determine How Much Interest You Pay

Know Repayment Rules

#62: Taking a Hardship Withdrawal

Know the Definition of a Hardship

Determine the Amount

#63: Rolling Over Your 401(k) to Avoid Taxes

#64: Leaving Money in Your Old Employer’s Plan

#65: Avoiding Lump-Sum Withdrawals

#66: Taking Your 401(k) Plan with You to Your New Job

#67: Investigating Tax-Deferred Ways to Save for College

Section 529 Plans

Coverdell Accounts

#68: Considering Costs of Different Colleges

Career and Vocational Training Schools

Community College and Continuing Education Classes

A Four-Year Public Education

A Private Education

#69: Working Part-Time and Summer Jobs

#70: Applying for Financial Federal Aid

#71: Squeezing Out Every Drop of Available College Money

Time the Receipt of Taxable and Tax-Exempt Income

Pay Down Debt

Anticipate Your Expenses

Spread Your Available Assets across Multiple Students

#72: Looking into Federal Assistance Programs

#73: Using Federal Loans

#74: Deferring or Discharging Student Loan Debt

#75: Consolidating Your College Loans

#76: Getting Tuition Discounts and Waivers

Eligibility-Based Discounts

Incentive-Based Discounts

#77: Finding College-Based Scholarships

#78: Accessing State and Local Scholarships

#79: Looking into Charitable Foundations for College Funds

#80: Tapping Organizations for Scholarships

#81: Accepting Work-Study Opportunities

#82: Receiving College Funding in Exchange for Service

#83: Searching Out Merit-Based Financial Aid

#84: Negotiating Better Financial Aid

Need-Based Money

Merit-Based Money

#85: Carefully Considering Retirement Accounts for College Expenses

#86: Knowing When to Refinance Your Mortgage

#87: Calculating the Cost of Refinancing

Tabulate Loan Fees (Including Those Notorious Hidden Fees)

Calculate Interest Over the Life of the Loan

Calculate the Total Cost of the Loan

Part 4: Living a Recession-Busting Life

#88: Developing Good Shopping Habits

#89: Buying Store Brands and in Bulk

#90: Seeing through the Gimmicks Grocery Stores Use

#91: Using Coupons and Rebates

#92: Targeting Seasonal Grocery Sales

#93: Planning Your Meals Economically

Find a Breakfast You and Your Wallet Will Love

Brown-Bag It in Style

Save on Scrumptious Dinners

#94: Stretching One Meal into Two (Or More)

#95: Finding Alternatives to Store-Bought Food

Grow Your Own Produce

Make Your Own Mixes and Convenience Items

#96: Saving on Baby Food

#97: Cooking Up Money Savings

Cook in Bulk

Use a Slow Cooker

Use an Instant Pot

#98: Canning and Preserving Your Food

#99: Freezing Fruits and Vegetables

Fruits

Veggies

#100: Trying Other Ways to Save in the Kitchen

#101: Getting Toiletries on a Budget

#102: Saving on Salon Expenses

#103: Cutting Your Kids’ Hair

#104: Expanding Your Wardrobe

#105: Getting Stains Out of Kids’ Clothing

#106: Reconstructing Your Clothes

#107: Shopping for Secondhand Clothes

#108: Utilizing Community Resources

#109: Having Fun in Your Own Backyard and Beyond

Take a Family Field Trip

Discover the Games People Play

Plan a Movie Night

#110: Saving for a Family Vacation

#111: Traveling on a Few Dollars a Day

Choose Less-Expensive Travel Times

Book Affordable Accommodations

Eat Well for Less

#112: Finding Transportation Bargains

Find a Deal on a Set of Wheels

Use Public Transportation

Bike or Walk

#113: Saving on Phone Bills

#114: Staying Cool on the Cheap

#115: Keeping Warm

Turn Down the Thermostat

Deal with Drafts

#116: Making Your Own Cleaning Solutions

White Vinegar

Baking Soda

Bleach

#117: Fixing Squeaky Floors

#118: Extending the Life of Your Roof

#119: Fixing Roof Leaks

#120: Prolonging the Life of Your Siding

Vinyl Siding

Stucco

Wood Siding

#121: Using Less Energy

#122: Keeping Your Fridge Running Well

Take Care of the Condenser Coils

Clean the Gasket

Defrost the Freezer and Drain Line

Maintain Inline Water Filtration

#123: Insulating to Save Energy Costs

Attic Insulation

Wall Insulation

Floor Insulation

#124: Insulating Pipes

#125: Insulating Heat Ducts

#126: Stopping Air Leaks

Air Leaks around Windows

Air Leaks around Doors

#127: Identifying and Fixing Plumbing Leaks

#128: Improving Water Heater Efficiency

#129: Helping Your Furnace Work More Efficiently

#130: Saving on Your Vehicle Fuel Expenses

Take a Look under the Hood

Start Up without Warming Up

Fill ’Er Up

Keep Your Side Windows Shut and the AC Turned off

Keep Your Tires Properly Inflated

#131: Adding Antifreeze

#132: Checking and Changing Your Oil

Check Your Oil

Change Your Oil

#133: Taking Care of Your Tires

Check Tire Pressure

Add Air to Your Tires

#134: Easily Making Other Automotive Checks and Fixes

Do a Monthly Under-the-Hood Check

Keep the Interior Clean

Wash the Vehicle Frequently and Keep It Out of the Sun

Change the Filters

#135: Choosing an Automotive Service Facility

Dealerships

Chain and Department Stores

Independents

Specialists

#136: Finding and Evaluating a New Automotive Service

Part 5: Making the Most of Holidays and Other Special Events

#137: Entertaining on a Shoestring

#138: Throwing a Party on a Budget

#139: Making Inexpensive Easter Baskets

#140: Creating Frightfully Affordable Halloween Costumes

#141: Celebrating a Budget-Friendly Thanksgiving

#142: Trying Creative Hanukkah and Christmas Ideas

#143: Hosting a Frugal Birthday Bash

#144: Packing Up Treats on the Cheap

#145: Finding Inexpensive Gifts for Your Sweetheart

#146: Checking Out Frugal Gift Ideas for Any Occasion

#147: Making Great Gift Baskets

#148: Cutting Costs with a Birthday Box

#149: Exploring Alternative Gift Ideas

#150: Looking at Gifts for Bridal and Baby Showers

Part 6: Staying Afloat If the Boat Starts to Sink

#151: Spotting Signs of Financial Trouble

#152: Avoiding Credit Pitfalls

#153: Getting Copies of Your Credit Report and Scores

Your Credit Report

Your Credit Score

#154: Checking Your Credit Report

#155: Disputing Inaccurate Info on Your Credit Report

The Dispute Process

How to Correct All Your Credit Reports

#156: Adding Positive Info to Your Credit Report

Add Utility and Cellphone Payments to Your Report

Open New Credit Accounts

#157: Taking the First Steps to Dig Out of Credit Card Debt

#158: Gauging Your Need for Help with Credit Situations

#159: Taking Debt Situations into Your Own Hands

Credit Cards

Mortgages

Student Loans

#160: Working with a Credit Counseling Agency

Debts Credit Counseling Can Help With

How to Find a Great Credit Counseling Agency

#161: Creating a Debt Management Plan

#162: Talking to Creditors to Work Out a Solution

Contact Your Creditor Promptly

Explain Your Situation

Offer a Solution

Cover All the Bases

#163: Negotiating a Payback Arrangement with Collectors

#164: Avoiding Debt Settlement

#165: Keeping Credit Under Control While Unemployed

Prepare Your Credit for the Worst-Case Scenario

Refigure the Family Budget

Protect Your Credit Lines

#166: Consolidating Debts

Discover Consolidation Options

Compare the Costs of Loans

#167: Taking Control When Foreclosure Looms

Freeze Your Finances

Prioritize Your Bills

Know Who to Contact

Gather Important Documents

#168: Drafting a Plan of Attack to Offset Foreclosure

#169: Understanding Types of Bankruptcy

Qualifying for Chapter 7

Qualifying for Chapter 13

#170: Avoiding Bankruptcy

Make a Budget

Allow Your Family to Bail You Out

Sell Your Assets

Transfer Credit Card Balances

Restructure Home Mortgages

#171: Choosing Which Bills to Pay When You File for Bankruptcy

#172: Negotiating with Creditors to Avoid Bankruptcy

Workout Agreements

A Threat of Bankruptcy

#173: Handling IRS Debts

Part 7: The Part of Tens

#174: Ten Ways to Trim the Money Tree

#175: Ten Ways to Handle Financial Emergencies

Index

Connect with Dummies

End User License Agreement

Guide

Cover

Table of Contents

Title Page

Copyright

Begin Reading

Index

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Introduction

Ask an economist what a recession is, and you’ll likely get the answer “a decline in gross domestic product lasting two or more consecutive quarters.” (Gross domestic product, or GDP, is the total value of goods and services produced in a country.) At the time of this writing, the United States isn’t officially in a recession, but the economy is definitely in a downturn.

This isn’t good news. Fortunately, you can do more than cross your fingers and hope for good luck. During a downturn, you have the following main objectives:

Prepare yourself in case you lose your job.

Companies are always looking for ways to save money. Unfortunately, payroll reduction (read “layoffs and firings”) is a way to save. Fortunately, by preparing a resume and seeing this as an opportunity to explore alternative careers and ways to work, you can be proactive in protecting yourself in case you find yourself on the job market.

Take control of your finances.

Figure out what you have and what you spend and then make deliberate decisions about ways to rein in your spending. Your goal should be to live within your means (if you’re not already), to preserve your long-term financial goals, and to save enough to see you through a period of unemployment in case you lose your job.

Continue to live and enjoy your life while maintaining control of your finances.

The key isn’t just to scale back but to do so in a way that you don’t feel deprived. You can save a lot just by being a savvier consumer and by spending your money a little differently.

Have a plan to follow if the worst happens.

In uncertain times, you may find yourself, despite your best efforts, facing a financial catastrophe like a bankruptcy or foreclosure. Even in these circumstances, you still have options — maybe not many, and maybe not pleasant ones, but options that can help you weather even these storms.

Bottom line: In a stumbling economy, you have to tread carefully, but you can still move forward. This book helps you one step at a time.

Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending as though the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click the web address to be taken directly to the web page.

About This Book

Living Well in a Down Economy For Dummies, 2nd Edition, contains 175 tips and suggestions to help you through tough economic times. How can you scale back on celebrations without sacrificing the fun? How can you continue to save for retirement when you need all your income to make ends meet now? What do you do when college loans — or tuition — come due and money is tight? How can you save money on household expenses?

This book answers these and other questions for people looking to save money without sacrificing quality of life.

Each part of this book is divided into tips containing information relevant to that part’s theme. The great thing about this book is that you decide where to start and what to read. It’s a reference you can jump into and out of at will. Thumb through to glance at a variety of tips, or go to the Table of Contents to find the different categories of tips.

Foolish Assumptions

In writing this book, we made some assumptions about you:

You feel uneasy about the economy and want to get yourself and your family in a better financial position.

You worry about losing your job, or you’ve already lost your job, and you need advice on finding work and cutting your expenses.

You want to know how you can continue to plan for long-term financial goals like retirement and college savings when money’s tight.

You want to be a savvier, more thoughtful consumer so you can continue to enjoy life’s pleasures without spending too much.

Icons Used in This Book

Many people, when facing stressful times, become very focused. In addition to myriad tips, this book uses the following icons to highlight information:

This icon appears beside especially important information: stuff that you absolutely need to know to make informed, wise decisions.

This icon highlights especially clever advice about living well when the economy is in a downturn.

When times are tough and money is tight, mistakes are especially dangerous. This icon warns you about things that may have serious negative consequences.

Beyond the Book

In addition to the material in the print or e-book you’re reading right now, this product comes with some access-anywhere goodies on the web. To get this free Cheat Sheet, simply go to www.dummies.com and search for “Living Well in a Down Economy For Dummies Cheat Sheet” in the Search box.

Where to Go from Here

Whether you read this book from front to back or jump in and out as the need arises, you’re certain to find a variety of ways to cut your expenses and stabilize your finances. Look at the Table of Contents to find general categories of tips, search the index to find specific tips, or just flip through until something catches your eye.

Part 1

Facing Off Against a Recession

IN THIS PART …

Take hold of your own finances and your attitude, even amid rising costs, falling income, uncertain employment, and no real idea how long the downturn will last. Harbingers like these can make anyone feel that economic stability is slipping beyond his grasp, but you can control how you respond.

Try out some useful relaxation tips — because everyone deserves a break during stressful times.

#3

Calculating Required Expenses

Your required expenses, or needs, must come first. To figure out what your required expenses are, fill out the following table by entering the total amount you’re personally responsible for or the total for the household, whichever is easier. (Sorry, your needs don’t include cellphones, cable or satellite TV, streaming TV services, or high-speed Internet, unless they’re required for employment. These aren’t necessary to sustain life, and therefore, you must classify them as wants.)

Shelter:

Mortgage or rent

$________________

Home maintenance

$________________

Utilities:

Electric

$________________

Gas

$________________

Water, sewer, and trash pickup

$________________

Basic phone service

$________________

Protection: Include the things you can’t afford to be without.

Life insurance

$________________

Disability insurance

$________________

Homeowner’s or renter’s insurance

$________________

Health insurance

$________________

Auto insurance

$________________

Healthcare/medical and dental care

$________________

Prescription drugs

$________________

Childcare

$________________

Rainy-day fund (minimum of 10 percent of gross income)

$________________

Food: This category doesn’t include dining out.

Groceries (basic essentials only)

$________________

Clothing and Clothing Maintenance: Presuming that you have some clothes now, ask yourself what else you really need.

$________________

Basic Hygiene:

Personal: toothbrush, deodorant, soap (for example)

$________________

Household: laundry detergent, toilet paper, and so on

$________________

Transportation: Only list required expenses. List any additional transportation costs in the wants category.

Automobile loan or lease payments

$________________

Auto maintenance

$________________

Gasoline

$________________

Other: tolls, parking, public transportation

$________________

Legal Requirements:

Real estate and property taxes

$________________

Child support

$________________

Alimony

$________________

Required Debt Payments Not Listed Elsewhere:

School loans

$________________

Personal loans

$________________

Credit cards

$________________

Other debt

$________________

Total Required Monthly Expenses (Needs)

$________________

After-Tax Income

Note: If you include all expenses for the household, add the after-tax income of both spouses/partners.

$________________

Surplus or Shortfall (After-Tax Income – Total Needs)

$________________

So where do you go after figuring out what you’re spending on needs? If you have a surplus after meeting your required living expenses, check out Tip #4, which covers using your excess money for wants. However, if your income comes up short (negative or close) after figuring out your needs, check out the nearby sidebar.

If you don’t already do so, set up automatic monthly withdrawals from your paycheck or your checking account to pay for or fund each of the required expenditures from the preceding table (just make sure you keep track if the values fluctuate). That way, you meet your requirements automatically each and every month, and whatever’s left over is yours to spend on your most important wants.

#4

Calculating Discretionary Spending

Hopefully you find yourself with some extra money after determining and paying for your needs (see Tip #3, “Calculating Required Expenses”), and you can begin to use some of that money for the items or services you want most. Use the following table to list your desired expenditures and to figure out how much you can justify spending on them.

When determining what to do with your surplus, just remember not to exceed that amount when prioritizing your wants.

Shelter:

Home renovations or remodeling

$________________

Home furnishings

$________________

Utilities:

Cellphone(s)

$________________

Streaming TV services

$________________

Cable or satellite TV

$________________

Internet

$________________

Additional Savings:

Children’s college

$________________

Retirement (minimum of 10 percent of gross income)

$________________

Vehicle replacement fund

$________________

Other financial goals

$________________

Food:

Groceries (beyond basic essentials)

$________________

Dining out

$________________

Meals purchased at school or work

$________________

Snacks and drinks purchased at school or work

$________________

Clothing and Clothing Maintenance (beyond basic essentials):

$________________

Personal:

Haircuts, perms, manicures, massages

$________________

Gifts: birthday, anniversary, wedding, holiday

$________________

Charitable donations

$________________

Entertainment:

Health club or other club membership(s)

$________________

Movies, plays, concerts

$________________

Vacations

$________________

Summer camp, sports, lessons, hobbies

$________________

Books and print subscriptions

$________________

Parties: holiday, birthday, social

$________________

Household:

Home maintenance: lawn care, exterminators, painters

$________________

Domestic help: housecleaning, baby sitters, pet sitters

$________________

Transportation (beyond basic essentials included in needs):

Automobile loan or lease payments

$________________

Vehicles and related expenses for children

$________________

Auto maintenance

$________________

Gasoline

$________________

Other: tolls, parking, public transportation

$________________

Other:

_____________________________________________

$________________

_____________________________________________

$________________

_____________________________________________

$________________

_____________________________________________

$________________

Total Desired Additional Monthly Expenses (Wants)

$________________

After-Tax Income

$________________

Surplus or Shortfall (After-Tax Income – [Total Needs + Total Wants])

$________________

After you add all your needs from Tip #3 together with your wants from the preceding table, you’ll likely discover that you have little or no surplus cash flow. If you have negative cash flow, you should revisit the preceding table and prioritize and/or reduce your expenditures so you don’t plan to spend more than you bring in.

#5

Tracking Expenses

Tracking your cash flow is especially useful when your outflow exceeds your income. Fortunately, you don’t need to go back and tally up months’ worth of checking account register entries, credit- and debit-card statement amounts, and cash withdrawals. This is a very time-consuming and painful exercise, and it doesn’t yield the desired results. What has happened in the past is behind you; all you can and should focus on is the present and the future.

Monitor your spending for the next couple of months. The hassle of tracking all expenditures is a deterrent to spending money unnecessarily. This activity helps raise your consciousness about each expenditure, which helps your budgeting immensely. The Weight Watchers organization has a very effective mantra: “If you bite it, you write it!” The same concept applies to expenses, and it works!

If you’re looking for a simpler method of tracking your expenses, carry a pocket notebook to track every cent of your surplus money or use the Notes app (or an app devoted to tracking expenses) on your smartphone. Record every occasion you spend your surplus money, whether you purchase a drink at work, buy gasoline on the way home, or go to the movies. Account for every cent. Also, track whether you paid by cash, check, or debit or credit card; who you paid; and whether the expenditure falls into the need or want category.

Use one log for each pay period or month, whichever works best for you. Note at the top of the worksheet (or in the Note) how much your beginning surplus is and subtract each expenditure from that amount.

By keeping your eye on the magic number (your surplus cash flow after meeting your required expenses), you can simply spend your money any way that best meets your priorities (your wants) so long as you don’t exceed the magic number. No more detailed budget keeping is required.

#7

Creating a Budget

Does the word budget send chills up your spine? It shouldn’t. Budgets allow you to be organized and have some control over what you spend. They help you decide how to spend your money, plan for your future, pay off existing debt, and save a few pennies each month by reducing wasteful and impulsive purchases.

Step 1: Categorize Your Expenses

When you begin setting up a monthly budget, start with big categories before breaking your budget down into smaller expense categories. A good list of basic budget categories to begin with includes the following:

Housing:

Mortgage/rent, repairs, property taxes, cleaning supplies, homeowner’s/renter’s insurance, utilities, furnishings, decor

Food:

Groceries, meals out, food delivery, snacks and beverages at work

Transportation:

Car payments, insurance, gas, oil changes, parking, repairs and maintenance, public transportation fees

Medical:

Insurance, out-of-pocket expenses such as deductibles and non-insurance covered medical services, pharmacy, eye care, dental

Clothing:

New purchases, dry cleaning, repair

Personal:

Cosmetics, haircuts, cleansers

Insurance:

Life insurance and any other insurance not covered under home, transportation, or medical expenses

Education:

Tuition, dues/fees, school pictures, yearbooks, school supplies, books

Credit accounts:

Major credit cards, department store cards, lines of credit through your bank or other lender, any other outstanding debt

Gifts:

Holidays, birthdays, graduations, weddings, showers

Recreation:

Vacations, movies, books, magazines, TV (cable, satellite, and/or streaming services), restaurants, sporting events, sports equipment

Savings:

Long-term and short-term goals, as well as retirement

Taxes:

Property and excise tax, for example

Donations:

Charities, religious groups, and so on

Be sure to set aside money each month for those yearly and quarterly payments that often sneak up on you when you least expect them. If you spend $1,200 on your yearly property taxes (and that payment isn’t included in your mortgage payment), divide that number by 12 and set aside $100 per month so you aren’t caught off guard by your property taxes, insurance payments, or any other periodic bills.

Within each general budget category, some items are essential (the mortgage or rent payment, electric bill, and groceries); others are extra (new furniture, gifts, and food delivery). From your first list of general budget items, develop two separate budget lists, one for essentials and the other for extras. Then look through these lists to find flexible budget expenses where you can cut back by using the tips and advice throughout this book. Put a star next to these flexible items so you can identify them.

Step 2: Estimate What You Spend

Go through your checking account and any other receipts or records (paper and/or online) you’ve kept over the past few months so you can track how much you actually spend on essentials. Then for one month, keep a detailed diary of all your extra purchases, even for cheap things like coffee at your favorite café or snacks from the vending machine at work. Little expenses quickly add up to big money when they’re made on a daily basis. These smaller, out-of-pocket purchases are frequently made with cash, so they usually don’t show up in your check register; writing them down makes you aware of where the cash is dribbling out of your life.

Step 3: Calculate and Adjust

Are your spending habits keeping you in the red? To find out, add up the essentials list and the extras list separately. Subtract the essentials total from your monthly income. If you have money left over, subtract the extras total from that amount. If you still have money left over, great! Look into a savings or investing plan (talk to your bank or a certified financial planner for help setting up a plan).

If your extras list takes you into negative numbers, start looking for places to cut back (for example, eat out once a month instead of once a week). You can also trim from the extras list to put more money toward debt repayment if that’s a high priority in your financial picture.

#8

Breathing Away Tension

As the economy heads south and you tighten your budget to keep spending under control, stress and tension creep into your life. You can’t control the economy, but that’s okay — truly living well is about far more than money. On the other hand, no matter how good things get, stress always leeches the fun out of the good life.

Breathing properly is one of the simplest and best ways to drain your tension and relieve your stress. Simply by changing your breathing patterns, you can rapidly induce a state of greater relaxation. If you control the way you breathe, you have a powerful tool in reducing bodily tension and increasing your joie de vivre.

Change the Way You Breathe

Altering the way you breathe can change the way you feel. Here’s one of the best and simplest ways of introducing yourself to stress-relieving breathing:

Either lying or sitting comfortably, put one hand on your belly and the other hand on your chest.

Inhale through your nose, making sure that the hand on your belly rises and the hand on your chest moves hardly at all.

As you inhale slowly, count silently to three.

As you exhale through your parted lips slowly, count silently to four, feeling the hand on your belly falling gently.

Pause slightly before your next breath. Continue to breathe like this until you feel completely relaxed.

Breathe through an Emergency

Breathing properly is no big deal when you’re lying on your bed or vegging out in front of the TV. But what’s your breathing like when you’re caught in gridlock, when you’re facing down a deadline, or when the stock market drops 20 percent? You’re now in a crisis mode. You need another form of breathing. Here’s what to do:

Inhale slowly through your nostrils, taking in a very deep diaphragmatic breath, filling your lungs and filling your cheeks.

Hold that breath for about six seconds.

Exhale slowly through your slightly parted lips, releasing all the air in your lungs.

Pause at the end of this exhalation. Now take a few “normal” breaths.

Repeat Steps 1 through 3 two or three times and then return to what you were doing. This form of deep breathing should put you in a more relaxed state.

#9

Tensing Your Way to Relaxation

The uncertainty of a faltering economy can tie anyone in knots, despite even the best of efforts to keep things in perspective, set priorities, and take control. Fortunately, one of the better relaxation techniques actually uses tense muscles to your benefit. It derives from a method called progressive relaxation, or deep muscle relaxation.

This method is based on the notion that you aren’t aware of what your muscles feel like when they’re tensed. By purposely tensing your muscles, you’re able to recognize what tension feels like and identify which muscles are creating that tension. This technique is highly effective and has been proven to be a valuable tool for quickly reducing muscle tension and promoting relaxation.

Relax Your Body, Part by Part

When you have 10 to 15 minutes, follow these steps for progressive relaxation:

Lie down or sit, as comfortably as you can, and close your eyes.

Find a quiet, dimly lit place that gives you some privacy, at least for a while.

Tense the muscles of a particular body part.

To practice, start by tensing your right hand and arm. Begin by simply making a fist. As you clench your fist, notice the tension and strain in your hand and forearm. Without releasing that tension, bend your right arm and flex your bicep, making a muscle the way you might to impress the kids in the schoolyard.

Don’t overdo it and strain yourself in any of these muscle-tensing maneuvers. When you tense a muscle group, don’t tense as hard as you can. Tense to about 75 percent of what you can do. If you feel pain or soreness, ease up on the tension, and if you still hurt, defer your practice until another time.

Hold the tension in the body part for about seven seconds.

Release the tension quickly, letting the muscles go limp.

Notice the difference in the way your hand and arm feel. Notice the difference between the sensations of tension and those of relaxation. Let these feelings of relaxation deepen for about 30 seconds.

Repeat Steps 1 through 4, using the same muscle group.

Move to another muscle group.

Simply repeat Steps 1 through 4, substituting a different muscle group each time. Continue with your left hand and arm and then work your way through the major muscle groups: face, head, neck, shoulders, back, legs, feet, buttocks, and stomach.

Use the Quickie Method

When pressed for time, you can use a quickie version of the progressive relaxation exercise explained in the preceding section. This technique compresses all the muscle tensing and relaxing sequences into one. Think of it as one gigantic scrunch.

In order to do this, you have to master the gradual version first. The success of this rapid form of relaxation depends on your ability to create and release muscle tension quickly, skills you master by slowly working through all the muscle groups individually.

To start, sit or lie comfortably in a room that is quiet and relatively free of distractions. Now, tense all of the muscle groups listed here, simultaneously:

Clench both fists, bend both arms, and tense your biceps.

Lift both legs until you notice a moderate degree of tension and discomfort.

Tense the muscles in your buttocks and hold that tension.

Scrunch up your face, closing your eyes, furrowing your brow, clenching your jaws, and pursing your lips.

Bring your shoulders as close as you can to your ears.

Tense your stomach muscles.