Recession Proofing / Part Deux



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Over a year ago, in Recession Proofing, I talked about five small (yet significant) financial adjustments I was making with the help of my family and friends. There were also some good suggestions in the comments. The object was to cut monthly expenses and for my new low budget to be sustainable irrespective of what's going on in the macro economy around me. I’m happy to report that I’m still doing those things now and I haven’t picked up any costly habits; although, I’ve since replaced the meal-sharing one with another one for the time being (see #3).

So now, I wanted to share some other things I’ve been doing lately, again, with the help and support of my family and friends. This time, the object is not only to continue to cut expenses, but to start saving money as well. Money is still tight, in fact, I'm working with pretty much the same amount as I was in Part 1, but I'm finding ways to adapt and still contribute to the things that are important to me.

1. Started Saving (really). It’s been said that you can’t seriously save if you have debt. But I considered that mindset a detriment to my livelihood. I just kept coming up on these expenses that I was not prepared for, financially. And further, they were far more of an immediate and debilitating inconvenience if they went unpaid than any debts I had. The cost of moving from one apartment to another (moving truck, rent deposit, utility set-up and deposits etc.), for instance, can run you thousands. Other incidentals, like car maintenance, getting new tires, or car registration renewals are things that we can come to expect, and thus plan for. So, I had already committed to automatically transferring $25 per paycheck into a free savings account. Recently, a decrease in Social Security taxes from 6.2 to 4.2 percent gave me an extra $27 on my check – so I’m putting that toward it as well.

Long term: I started involving my mom in my saving initiatives. She has a lot more accounts with higher balances and higher interest rates. So, instead of dabbling with these low, .0000000001 percent interest CD accounts with the low balances I was working with, the plan is for every $500 I save, to withdraw it and let my mom add it to a higher yielding account that she already has in place. The higher balance will help her earn more interest overall and we can always split the difference.

2. Sign up for automatic withdrawals. I’ve been known to resist automatic transactions because they could prove to be, in a word, disastrous. But I realize that it doesn’t have to be all or nothing; and most times, it was disastrous more because of a lack of discipline, than an actual lack of funds. I looked at my monthly expenses and identified the bills that I couldn’t “shift around” like my car insurance and student loan payments and started with those by setting up an automatic payment. With my Sallie Mae alone, I’m saving $10 a month by not paying it over the phone. Car Insurance? $5. With the ones that I don’t have set up for automatic debit, I started being more diligent about sending in a payment in advance or paying online so I won’t have to pay the convenience fee (AKA “procrastinator’s premium”). When I added up the amount of money combined that I was paying for the convenience of calling in a payment for all of my bills, it came up to about $30 a month.

3. Buy Bulk. Two friends and I went in on a $50 CostCo membership card. We’ll frequently buy things in bulk and split it three ways. Works out.

4. Opt out of overdraft fees. Back in the day I used to cut it too close and depend too much on my reported “Available Balance,” and end up getting hit up for $35 + $4.95 for that Pineapple Orange Banana Sunrise Smoothie King smoothie. Not anymore. Not only am I a lot better now with balancing the check book (irrespective of the weird way that the bank that shan’t be named calculates things) but I opted out of overdraft protection, so that if the money ever wasn’t there, the attempted purchase would just get declined on the spot. #I’llbeaight #gotfruitathomeANYWAY

5. Ask for help and be specific. A friend of mine recently lamented not thinking he had anyone he could turn to if he ever came up on some money issues. I asked him, had he asked? I felt him. It’s not too long ago that I got myself in all manner of credit card debt simply because I didn’t want to ask for help. And it didn’t just have to do with bills … I’m talking about even things like getting dropped to the airport so I wouldn’t have to pay for airport parking over the weekend. Or, just asking a friend to hold me down for a week, if my car was in the shop (versus renting a car). I realize now that a big part of friendship is being able to trust that your friends will come through for you if you have faith in the bond that you're building; and if you actually speak up.

I also wanted to share what some of my friends have been doing:

1. Have your folks add you to their car insurance policy. It’s likely that they have a lower car insurance rate than you because they've been driving longer. You can pay them your portion, which is likely lower than what you'd be paying on your own.

2. Lease Negotiation. A lot of people are up for lease re-signing right around now. If you know you’re not going anywhere for a while, say, you started a new job, or you’re beginning grad school; at your lease re-signing, negotiate a long-term (as in 2-5 year) lease agreement in exchange for a lower monthly rental rate. An alternative: As a renewal incentive, ask for a month’s free rent and have them spread it out over 12 months, which lowers your monthly payments. If you have a pet, ask them to waive the fee. I've seen all these things happen this past year. Apartment occupancy is down across the board so you have options.

3. Bypass the ATM. Some people have been banking with a hometown bank that may not have any branches in their current city of residence. If this is the case, rather than incur extra charges by using an ATM, simply get cash-back at your next grocery store visit.

Do you have any cost-cutting, money-saving ideas that have been working for you?