The recession has millions of consumers spending less, saving more and paying off debt.
Jean Chatzky and Arielle McGowen have the full scoop for us from Oprah.com- there are essentials, my bargain hunter friend, which we should never skimp on. There are items in any budget that can be scaled back
easily, and the fact that we're adjusting to the reality of this economy is definitely good
news; do your best, though, to draw a line in the sand, about where your spending shouldn't budge.
Retirement Planning
The Pension Rights Center counted about 20 corporations in December
that announced changes to their 401(k) plans. Many others have
discontinued or downsized their traditional pension plans. If your
company is still offering matching dollars, keep kicking in
money to grab them.
"To get that free money from your employer
is so important for the long-term growth of your retirement nest egg.
Especially now, with the down market, when you're dollar-cost averaging
in at lower prices, that free money has more value in the long run,"
said Derek Kennedy, a financial planner in Cincinnati.
If your
company has cut back, it still pays to contribute. Also consider an
Individual Retirement Account. You can get your money out any time and,
after five years, use it without penalty for a first-time home purchase.
Insurance
Don't cut your homeowners insurance thinking that because home values
have dropped you don't need as much coverage. What you're paying for is
the amount it would cost to rebuild your home and replace your
belongings. If you need to save, boost your policy's deductible.
Raising it to $1,000 from $500 could shave 25 percent off the cost.
Exercise
Blue Cross Blue Shield of Minnesota just
completed a study that found that people who go to the gym at least
eight times a month have significantly lower health costs than those
who don't. Make a decision to drop your gym membership? This, you can do. Drop the exercise, since you aren't going to a gym? Don't. You can get those same benefits by going for a brisk walk,
running or riding a bike or by spending less than the cost of a monthly
gym membership on a pair of dumbbells.
Health care
Some cuts are fine—generic drugs instead of name brand, for instance.
But skipping doctor visits is a bad idea, and so is canceling your
insurance. According to a recent Harvard University study (which was done before our current recession, by the way), medical problems caused 62% of all personal bankruptcies filed in the
U.S. in 2007. Another shocker: 78% of those filers had
medical insurance at the start of their illnesses, including 60.3% who
had private coverage, not Medicare or Medicaid.
"I've seen so many people go through horrendous
financial nightmares and even bankruptcy because they don't have health
insurance. This is just not one you want to mess with," said Jonni
McCoy, author of Miserly Moms: Living Well on Less in a Tough Economy.
Charity
Giving to others can make you feel better about yourself and your
situation. If money is tight, donate items you no longer use, give
canned goods, shop at thrift stores that benefit a charity or share
some of your time. The big point here is not how much you can give, how many items you donate, but the fact that you continue to do so.
John
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