DH is worried about losing his job so we did a financial fire drill last weekend. Once you include all our annual expenses we’re living on more than just my take-home pay.
We talked about ways we could cut if we needed to. Sadly most of the ways are not very financially healthy for the long-term or for our souls. Here’s the break-down:
Reduce/stop charity expenditures
stop pre-paying mortgage
fewer disks on netflix
target lawn watering and reduce sprinkler use
increase home energy efficiency (recaulk)
reduce book buying
reduce eating out/costs of eating out
reduce costs for grocery shopping
Most of these are not very satisfying. We’re taking money that used to go to savings and redirecting it to spending. We’re taking money that used to go to charity and redirecting it to spending.
On the one hand, it is ridiculous that we cannot live on my salary alone. We lived in an incredibly expensive coastal city on 36K-40somethingK/year for several years and managed to pay off debt and save up for a house downpayment. Some expenses that came with having a child we can’t really get around– childcare, increased insurance costs etc. But that isn’t enough to be the difference between my current salary and our combined graduate salaries. Not even if you add in our increased marginal tax rate.
On the other hand, to really cut down on these expenses we would have to spend time, which is precious, and worry about money, which I really enjoy not having to do. We worked really hard and made specific choices to get to this point in our financial life. I don’t WANT to go back to worrying about every dime, or freaking out whenever we have an unexpected major expense. DH likes being able to take things to goodwill instead of selling them on e-bay. These are things we could do if we had to, but we don’t have to (yet). We’re spending for the increased peace of mind.
If we really want to cut our expenses we need to focus on our food bills. Food is our major expense. We eat out about once a week, but when we eat out, we don’t hold back. We could go back to looking at prices on the menus instead of just ordering what we want. We can skip some combination of appetizers, main meals, and/or desserts. We could not get the fresh squeezed lemonade. (But I LIKE fresh squeezed lemonade.) We could order more pizza instead of going out.
In terms of grocery shopping, my expensive cheese habit would probably have to go. The big thing we would need to do would be to better time our purchases to take advantage of sales. I like the freedom of not doing that now, not keeping in my head what things generally cost.
Right now we don’t actually HAVE to make any changes (we’re saving more than half our total income, just not living off my take-home pay anymore), but we might have to make bigger changes in the future.
The big question is how much of this should we be doing now. We’re already pretty good on many things. Purchases of durables and non-durables, gasoline costs, even eating out. We probably could use an energy audit as the house has gotten leaky since we moved here. We’ve gone through most of our regular bills and bargained them down, but not the insurance. I just don’t know if it’s worth our time to buckle down now instead of later. Probably not…
Also… I want a raise.
Have you done a financial fire drill? What are the first things that come to mind that you could cut in the event of a job loss?