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How to Downsize Your Life While Still Living Large!

Updated on March 23, 2013
Regain Control of Your Finances
Regain Control of Your Finances

STEP ONE: Regaining Control of Your Finances

If you are like a lot of folks out there today, you have had to face the fact that money is tight. With inflation and family changes like job loss, reduced income, foreclosures and similar situations, many families have had to step back and take a good hard look at their life style and resources to "make ends meet!"

There is good news for struggling families however, and it really isn't rocket science and rarely requires an expensive education or personal financial planner to figure some things out that will get you back on track! The most important step is getting reliable sources for information and I believe this article will assist you in that endeavor.

You should know that in last few years, my family has experienced both the threat of foreclosure and bankruptcy due to job loss and reduction in work, while prices of gas and food have continued to increase. The reason I tell you this, is so you will know that the information I am providing, is tested in real life with an everyday family and WORKS!

The first step in getting control of your finances is to sit down and list all your assets, income and expenses. Although this sounds simple, many families fail to determine where their money is actually going on a monthly basis. You MUST remember to include expenses like going out to eat, school expenses for children (or adults!), vehicle registration and maintenance, annual dues or fees, credit card interest, clothing and entertainment costs. When you list your expenses and are as honest with yourself as possible, you will have a more realistic view of your overall situation and budget needs.

After you have listed out every expense for your family, both monthly and yearly, you will want to think hard about which are a necessity and which are merely luxuries. This is one of the most difficult steps, because for many families, it is a wake up call about how many things we "think" we need that in reality are not essential for survival. The point is not to deprive yourself of these things altogether, but be honest with yourself, and identify which are vital to live and which could be temporarily or permanently eliminated to free up cash. That stop at Starbucks each day on the way to work, for example, might be switched to making your own delicious coffee at home and saving $100.00 per month! That adds up to $1200.00 per year! After you have identified which expenses are truly on the need column or luxury column, you will have to make decisions according to your particular income level, not only which costs you could live without (at least for awhile!) and which are needed to survive.

Don't fret yet since increasing cash flow is going to relieve a lot of stress and in the end that will be more satisfying than the convenience or fleeting pleasures, not to mention might even make you healthier, as many studies have shown stress can be an immune system buster or worse-lead to disease and high blood pressure! So, now to narrow down our list, we want to take a hard look at things like housing, utilities and vehicles that are necessary, but not always the best ones for our budget. For example, if you have a 3,000 sq. ft. house that costs $1,500.00 monthly, but you could easily live comfortably in a house half the size, or you are driving a large truck with an expensive payment that uses a lot of fuel, or you opted for the top of the line cable TV and/ or phone package; you may want to consider alternatives.

Each household has to work this out on their own, according to their individual situation or degree of financial crisis, but you get the point. It gets easier, and eventually becomes almost like a challenge to see how many things you can swap out for a more affordable choice. And, do not forget things like health and car insurance. When is the last time you decided to shop around? I know! It is not the most pleasant chore, but, you'd be surprised how often families overlook this one simple idea to save. Bundling home, car and other insurance can reap unbelievable rewards! Just the other day I checked on my old phone plan, and was advised I could save $30.00 monthly without losing any perks, just by updating to a more modern package! Also, I could pay the same on the new plan and have more features! Being on the lookout for deals often just involves ASKING and doing a little investigating.

Stay tuned for more helpful tips on creating a workable family or personal budget; credit card pitfalls and ways to keep your credit and interest rates lower; how to avoid foreclosures; home or vehicle loan modification or refinancing; filing for bankruptcy or how to avoid bankruptcy and how to know which choices are better for you in your situation!


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